CONFIDENTIAL
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FLUSHING FINANCIAL CORPORATION
AND
ATLANTIC LIBERTY FINANCIAL CORP.
DECEMBER 20, 2005
TABLE OF CONTENTS
ARTICLE I CERTAIN DEFINITIONS.................................................1
1.1 Certain Definitions..........................................1
ARTICLE II THE MERGER.........................................................7
2.1 Merger.......................................................7
2.2 Closing; Effective Time......................................8
2.3 Certificate of Incorporation and Bylaws......................8
2.4 Directors and Officers of Surviving Corporation..............8
2.5 Effects of the Merger........................................8
2.6 Tax Consequences.............................................8
2.7 Possible Alternative Structures..............................9
2.8 Additional Actions...........................................9
ARTICLE III CONVERSION OF SHARES..............................................9
3.1 Conversion of ALFC Common Stock; Merger Consideration........9
3.2 Election Procedures.........................................10
3.3 Procedures for Exchange of ALFC Common Stock................13
3.4 Treatment of ALFC Options...................................14
3.5 Bank Merger.................................................16
3.6 Reservation of Shares.......................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ALFC............................16
4.1 Standard....................................................16
4.2 Organization................................................16
4.3 Capitalization..............................................17
4.4 Authority; No Violation.....................................18
4.5 Consents....................................................18
4.6 Financial Statements........................................19
4.7 Taxes.......................................................19
4.8 No Material Adverse Effect..................................21
4.9 Material Contracts; Leases; Defaults........................21
4.10 Ownership of Property; Insurance Coverage...................22
4.11 Legal Proceedings...........................................22
4.12 Compliance With Applicable Law..............................23
4.13 Employee Benefit Plans......................................23
4.14 Brokers, Finders and Financial Advisors.....................26
4.15 Environmental Matters.......................................26
4.16 Loan Portfolio..............................................27
4.17 Securities Documents........................................28
4.18 Related Party Transactions..................................28
4.19 Deposits....................................................29
4.20 Antitakeover Provisions Inapplicable; Required Vote.........29
4.21 Registration Obligations....................................29
4.22 Risk Management Instruments.................................29
4.23 Fairness Opinion............................................29
i
4.24 Intellectual Property.......................................30
4.25 ALFC Information............................................30
ARTICLE V REPRESENTATIONS AND WARRANTIES OF FFC..............................30
5.1 Standard....................................................30
5.2 Organization................................................31
5.3 Capitalization..............................................31
5.4 Authority; No Violation.....................................32
5.5 Consents....................................................32
5.6 Financial Statements........................................32
5.7 No Material Adverse Effect..................................33
5.8 Legal Proceedings...........................................33
5.9 Compliance With Applicable Law..............................33
5.10 Securities Documents........................................34
5.11 Brokers, Finders and Financial Advisors.....................34
5.12 FFC Information.............................................34
5.13 FFC Common Stock............................................35
5.14 Deposits....................................................35
5.15 Risk Management Instruments.................................35
5.16 Material Contracts..........................................35
5.17 Employee Benefit Plans......................................35
5.18 Environmental Matters.......................................36
5.19 Loan Portfolio..............................................36
5.20 Taxes.......................................................37
ARTICLE VI COVENANTS OF ALFC.................................................38
6.1 Conduct of Business.........................................38
6.2 Current Information.........................................42
6.3 Access to Properties and Records............................43
6.4 Financial and Other Statements..............................43
6.5 Maintenance of Insurance....................................43
6.6 Disclosure Supplements......................................44
6.7 Consents and Approvals of Third Parties.....................44
6.8 All Reasonable Efforts......................................44
6.9 Failure to Fulfill Conditions...............................44
6.10 No Solicitation.............................................44
6.11 Employee Benefits...........................................45
6.12 Reserves and Merger-Related Costs...........................46
ARTICLE VII COVENANTS OF FFC.................................................46
7.1 Conduct of Business.........................................46
7.2 Current Information and Consultation........................46
7.3 Disclosure Supplements......................................47
7.4 Consents and Approvals of Third Parties.....................47
7.5 All Reasonable Efforts......................................47
7.6 Failure to Fulfill Conditions...............................47
7.7 Employee Benefits; Advisory Board...........................47
ii
7.8 Directors and Officers Indemnification and Insurance........49
7.9 Stock Listing...............................................50
7.10 Stock and Cash Reserve......................................50
7.11 Section 16(b) Exemption.....................................50
ARTICLE VIII REGULATORY AND OTHER MATTERS....................................51
8.1 Meetings of Stockholders....................................51
8.2 Proxy Statement-Prospectus; Merger Registration Statement...51
8.3 Regulatory Approvals........................................52
8.4 Affiliates..................................................52
ARTICLE IX CLOSING CONDITIONS................................................53
9.1 Conditions to Each Party's Obligations under this Agreement.53
9.2 Conditions to the Obligations of FFC under this Agreement...54
9.3 Conditions to the Obligations of ALFC under this Agreement..54
ARTICLE X THE CLOSING........................................................55
10.1 Time and Place..............................................55
10.2 Deliveries at the Pre-Closing and the Closing...............55
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER.................................55
11.1 Termination.................................................55
11.2 Effect of Termination.......................................59
11.3 Amendment, Extension and Waiver.............................60
ARTICLE XII MISCELLANEOUS....................................................61
12.1 Confidentiality.............................................61
12.2 Public Announcements........................................61
12.3 Survival....................................................61
12.4 Notices.....................................................61
12.5 Parties in Interest.........................................62
12.6 Complete Agreement..........................................62
12.7 Counterparts................................................62
12.8 Severability................................................62
12.9 Governing Law...............................................63
12.10 Interpretation..............................................63
12.11 Specific Performance........................................63
Exhibit A Form of Plan of Bank Merger
Exhibit B Form of Voting Agreement
Exhibit C Affiliates Agreement
iii
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of
December 20, 2005, by and between Flushing Financial Corporation, a Delaware
corporation ("FFC"), and Atlantic Liberty Financial Corp., a Delaware
corporation ("ALFC ").
WHEREAS, the Board of Directors of each of FFC and ALFC has (i) determined
that this Agreement and the business combination and related transactions
contemplated hereby are in the best interests of their respective companies and
stockholders, (ii) has determined that this Agreement and the transactions
contemplated hereby are consistent with and in furtherance of their respective
business strategies, and (iii) has approved this Agreement at meetings of each
of such Boards of Directors; and
WHEREAS, in accordance with the terms of this Agreement, ALFC will merge
with and into FFC (the "Merger") and immediately thereafter Atlantic Liberty
Savings, F.A., a wholly owned subsidiary of ALFC, will be merged with and into
Flushing Savings Bank, FSB a wholly owned subsidiary of FFC (the "Bank Merger");
and
WHEREAS, as a condition to the willingness of FFC to enter into this
Agreement, each of the directors and executive officers of ALFC have entered
into a Voting Agreement, substantially in the form of Exhibit B hereto, dated as
of the date hereof, with FFC (the "Voting Agreement"), pursuant to which each
such director or executive officer has agreed among other things, to vote all
shares of common stock of ALFC owned by such person in favor of the approval of
this Agreement and the transactions contemplated hereby, upon the terms and
subject to the conditions set forth in such Voting Agreement; and
WHEREAS, the parties intend the Merger to qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the business transactions described in this
Agreement and to prescribe certain conditions thereto.
NOW, THEREFORE in consideration of the mutual covenants, representations,
warranties and agreements herein contained and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 Certain Definitions.
As used in this Agreement the following terms have the following meanings
(unless the context otherwise requires, references to Articles and Sections
refer to Articles and Sections of this Agreement).
"Affiliate" means any Person who directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, such Person and, without limiting the generality of the foregoing,
includes any executive officer or director of such Person and any Affiliate of
such executive officer or director.
"Agreement" means this agreement, and any amendment hereto.
"ALFC" shall mean Atlantic Liberty Financial Corp., a Delaware corporation,
with its principal offices located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx
00000.
"ALFC Common Stock" shall mean the common stock, par value $0.10 per share,
of ALFC.
"ALFC Disclosure Schedule" shall mean a written disclosure schedule
delivered by ALFC to FFC specifically referring to the appropriate section of
this Agreement.
"ALFC ESOP" shall mean the Atlantic Liberty Savings, F.A. Employee Stock
Ownership Plan.
"ALFC Financial Statements" shall mean (i) the audited consolidated
statements of financial condition (including related notes and schedules, if
any) of ALFC as of March 31, 2005 and 2004 and the consolidated statements of
income, changes in stockholders' equity and cash flows (including related notes
and schedules, if any) of ALFC for each of the two years ended March 31, 2005
and 2004, as set forth in ALFC's annual report for the year ended March 31, 2005
and (ii) the unaudited interim consolidated financial statements of ALFC as of
the end of each calendar quarter following March 31, 2005 and for the periods
then ended, as filed by ALFC in its Securities Documents.
"ALFC Group" means any combined, unitary, consolidated or other affiliated
group within the meaning of Section 1504 of the Code or otherwise, of which ALFC
or any ALFC Subsidiary is or has been a member for Tax purposes.
"ALFC Stock Benefit Plan" shall mean the ALFC 2003 Incentive Stock Benefit
Plan, and any and all amendments thereto.
"ALFC Option" shall mean an option to purchase shares of ALFC Common Stock
granted pursuant to the ALFC Stock Benefit Plan and outstanding as of the date
hereof, as set forth in ALFC Disclosure Schedule 4.3.1.
"ALFC Stockholders Meeting" shall have the meaning set forth in Section
8.1.1.
"ALFC Subsidiary" means any corporation, 50% or more of the capital stock
of which is owned, either directly or indirectly, by ALFC or Atlantic Liberty
Savings, F.A., except any corporation the stock of which is held in the ordinary
course of the lending activities of Atlantic Liberty Savings, F.A.
"Atlantic Liberty Savings, F.A." shall mean Atlantic Liberty Savings, F.A.,
a federally chartered savings association, with its principal offices located at
000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, which is a wholly owned
subsidiary of ALFC.
"Bank Merger" shall mean the merger of Atlantic Liberty Savings, F.A. with
and into Flushing Savings Bank, FSB, with Flushing Savings Bank, FSB as the
surviving institution, which merger shall occur immediately following the
Merger.
"Bank Regulator" shall mean any Federal or state banking regulator,
including but not limited to the OTS and the FDIC, which regulates Flushing
Savings Bank, FSB or Atlantic Liberty Savings, F.A., or any of their respective
holding companies or subsidiaries, as the case may be.
"Cash Consideration" shall have the meaning set forth in Section 3.1.3.
2
"Cash Election" shall have the meaning set forth in Section 3.2.2.
"Cash Election Shares" shall have the meaning set forth in Section 3.2.1.
"Cash/Stock Consideration" shall have the meaning set forth in Section
3.1.3.
"Certificate" shall mean a certificate evidencing shares of ALFC Common
Stock.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreements" shall mean the confidentiality agreements
referred to in Section 12.1 of this Agreement.
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenting Shares" shall have the meaning set forth in Section 3.1.4.
"Dissenting Stockholder" shall have the meaning set forth in Section 3.1.4.
"Effective Time" shall mean the date and time specified pursuant to Section
2.2 hereof as the effective time of the Merger.
"Election Deadline" shall have the meaning set forth in Section 3.2.3.
"Election Form" shall have the meaning set forth in Section 3.2.2.
"Election Form Record Date" shall have the meaning set forth in Section
3.2.2.
"Environmental Laws" means any applicable Federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
governmental entity relating to (1) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (2) the exposure to, or
the use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Materials of
Environmental Concern. The term Environmental Law includes without limitation
(a) the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. ss.9601, et seq; the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. ss.6901, et seq; the Clean Air Act, as amended, 42 U.S.C.
ss.7401, et seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
ss.1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C.
ss.2601, et seq; the Emergency Planning and Community Right to Know Act, 42
U.S.C. ss.11001, et seq; the Safe Drinking Water Act, 42 U.S.C. ss.300f, et seq;
and all comparable state and local laws, and (b) any common law (including
without limitation common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to the presence of or
exposure to any Materials of Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
3
"Exchange Agent" shall mean EquiServe Trust Company NA, or such other bank
or trust company or other agent designated by FFC, and reasonably acceptable to
ALFC, which shall act as agent for FFC in connection with the exchange
procedures for exchanging Certificates for the Merger Consideration.
"Exchange Fund" shall have the meaning set forth in Section 3.3.1.
"Exchange Ratio" shall have the meaning set forth in Section 3.1.3.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FFC" shall mean Flushing Financial Corporation, a Delaware corporation,
with its principal executive offices located at 0000 Xxxxxx Xxxxxx, Xxxxx X000,
Xxxx Xxxxxxx, Xxx Xxxx 00000.
"FFC Common Stock" shall mean the common stock, par value $0.01 per share,
of FFC.
"FFC Disclosure Schedule" shall mean a written disclosure schedule
delivered by FFC to ALFC specifically referring to the appropriate section of
this Agreement.
"FFC Financial Statements" shall mean the (i) the audited consolidated
statements of financial condition (including related notes and schedules) of FFC
as of December 31, 2004 and 2003 and the consolidated statements of income,
changes in stockholders' equity and cash flows (including related notes and
schedules, if any) of FFC for each of the three years ended December 31, 2004,
2003 and 2002, as set forth in FFC's annual report for the year ended December
31, 2004, and (ii) the unaudited interim consolidated financial statements of
FFC as of the end of each calendar quarter following December 31, 2004 and for
the periods then ended, as filed by FFC in its Securities Documents.
"FFC Group" means any combined, unitary, consolidated or other affiliated
group within the meaning of Section 1504 of the Code or otherwise, of which FFC
or any FFC Subsidiary is or has been a member for Tax purposes.
"FFC Rights Agreement" shall mean the Rights Agreement, dated as of
September 17, 1996, between FFC and State Street Bank and Trust Company, as
rights agent, relating to FFC's Series A Junior Participating Preferred Stock.
"FFC Stock Benefit Plans" shall mean the FFC 2005 Omnibus Incentive Plan,
the FFC 1996 Stock Option Incentive Plan and the FFC 1996 Restricted Stock
Incentive Plan.
"FFC Stock Purchase Rights" shall mean the Rights to purchase units of
FFC's Series A Junior Participating Preferred Stock in accordance with the terms
of the FFC Rights Agreement.
"FFC Subsidiary" means any substantial corporation or limited liability
company, 50% or more of the capital stock of which is owned, either directly or
indirectly, by FFC or Flushing Savings Bank, FSB, except any corporation the
stock of which is held in the ordinary course of the lending activities of
Flushing Savings Bank, FSB.
"FHLB" shall mean the Federal Home Loan Bank of New York.
"Flushing Savings Bank, FSB" shall mean Flushing Savings Bank, FSB, a
federally chartered savings bank, with its principal offices located at 0000
Xxxxxx Xxxxxx, Xxxxx X000, Xxxx Xxxxxxx, Xxx Xxxx 00000, which is a wholly owned
subsidiary of FFC.
4
"GAAP" shall mean accounting principles generally accepted in the United
States of America.
"Governmental Entity" shall mean any Federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"HOLA" shall mean the Home Owners' Loan Act, as amended.
"Intellectual Property" shall have the meaning set forth in section 4.24.
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" as used with respect to a Person (including references to such
Person being aware of a particular matter) means those facts that are known by
the executive officers and directors of such Person, and includes any facts,
matters or circumstances set forth in any written notice from any Bank Regulator
or any other material written notice received by an executive officer or
director of that Person.
"Mailing Date" shall having the meaning set forth in Section 3.2.2.
"Material Adverse Effect" shall mean, with respect to FFC or ALFC,
respectively, any effect that (i) is material and adverse to the financial
condition, results of operations or business of FFC and the FFC Subsidiaries
taken as a whole, or ALFC and the ALFC Subsidiaries taken as a whole,
respectively, or (ii) does or would materially impair the ability of either
ALFC, on the one hand, or FFC, on the other hand, to perform its obligations
under this Agreement or otherwise materially threaten or materially impede the
consummation of the transactions contemplated by this Agreement; provided that
"Material Adverse Effect" shall not be deemed to include the impact of (a)
changes in laws and regulations affecting banks or thrift institutions
generally, or interpretations thereof by Courts or governmental agencies, (b)
changes in GAAP or regulatory accounting principles generally applicable to
financial institutions and their holding companies, (c) actions and omissions of
a party hereto (or any of its Subsidiaries) taken with the prior written consent
of the other party, (d) the announcement of this Agreement and the transactions
contemplated hereby, and compliance with this Agreement on the business,
financial condition or results of operations of the parties and their respective
Subsidiaries, including the expenses incurred by the parties hereto in
consummating the transactions contemplated by this Agreement (consistent with
the information included in the Disclosure Schedules), and (e) any change in the
value of the securities or loan portfolio of FFC or ALFC, respectively, whether
held as available for sale or held to maturity, resulting from a change in
interest rates generally.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products, and any other
materials regulated under Environmental Laws, including, but not limited to,
radon, radioactive material, asbestos, asbestos-containing material, urea
formaldehyde foam insulation, lead, polychlorinated biphenyl, flammables and
explosives.
"Merger" shall mean the merger of ALFC with and into FFC pursuant to the
terms hereof.
"Merger Consideration" shall mean the cash or FFC Common Stock, or
combination thereof, in an aggregate per share amount to be paid by FFC for each
share of ALFC Common Stock, as set forth in Section 3.1.
"Merger Registration Statement" shall mean the registration statement,
together with all amendments, filed with the SEC under the Securities Act for
the purpose of registering shares of FFC Common Stock to be offered to holders
of ALFC Common Stock in connection with the Merger.
5
"Mixed Election" shall have the meaning set forth in Section 3.2.2.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ" shall mean the Nasdaq National Market.
"Non-Election" shall have the meaning set forth in Section 3.2.2.
"Non-Election Shares" shall having the meaning set forth in Section 3.2.1.
"OTS" shall mean the Office of Thrift Supervision or any successor thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" shall have the meaning set forth in Section 4.13.2.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under the
Exchange Act).
"Pre-Effective Time Tax Period" means any taxable period (or the allocable
portion of a Straddle Period) ending on or before the close of business on the
date the Effective Time occurs.
"Proxy Statement-Prospectus" shall have the meaning set forth in Section
8.2.1.
"Regulatory Agreement" shall have the meaning set forth in Section 4.12.3.
"Regulatory Approvals" means the approval of any Bank Regulator that is
necessary in connection with the consummation of the Merger, the Bank Merger and
the related transactions contemplated by this Agreement.
"Representative" shall have the meaning set forth in Section 3.2.2.
"Rights" shall mean warrants, options, rights, convertible securities,
stock appreciation rights and other arrangements or commitments which obligate
an entity to issue or dispose of any of its capital stock or other ownership
interests or which provide for compensation based on the equity appreciation of
its capital stock.
"SBA" shall mean the Small Business Administration or any successor
thereto.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars, proxy
statements, registration statements and all similar documents filed pursuant to
the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder.
"Shortfall Number" shall have the meaning set forth in Section 3.2.5.
6
"Significant Subsidiary" shall have the meaning set forth in Rule 1-02 of
Regulation S-X of the SEC.
"Stock Consideration" shall have the meaning set forth in Section 3.1.3.
"Stock Conversion Number" shall have the meaning set forth in Section
3.2.1.
"Stock Election" shall have the meaning set forth in Section 3.2.2.
"Stock Election Number" shall have the meaning set forth in Section 3.2.1.
"Stock Election Shares" shall have the meaning set forth in Section 3.2.1.
"Straddle Period" means any taxable period that includes (but does not end
on) the date of the Effective Time.
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
"Tax" means any and all (a) Federal, state, local or foreign tax, fee or
other like assessment or charge of any kind, including, without limitation, any
net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, value-added, transfer, franchise, profits, license,
withholding on amounts paid to or by the taxpayer, payroll, employment, excise,
severance, stamp, capital stock, occupation, property, environmental or windfall
tax, premium, customs duty or other tax, together with any interest, penalty
additions to tax; (b) liability for the payment of Tax as the result of
membership in the ALFC Group and (c) transferee or secondary liability in
respect of any Tax (whether imposed by law or contractual arrangement).
"Tax Return" means any return (including estimated returns), declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any such document prepared on an affiliated, consolidated, combined or
unitary group basis and any schedule or attachment thereto.
"Taxing Authority" means any governmental or regulatory authority, body or
instrumentality exercising any authority to impose, regulate or administer the
imposition of Taxes.
"Termination Date" shall mean July 15, 2006.
"Treasury Stock" shall have the meaning set forth in Section 3.1.2.
Other terms used herein are defined in the preamble and elsewhere in this
Agreement.
ARTICLE II
THE MERGER
2.1 Merger.
Subject to the terms and conditions of this Agreement, at the Effective
Time: (a) ALFC shall merge with and into FFC, with FFC as the resulting or
surviving corporation (the "Surviving Corporation"); and (b) the separate
existence of ALFC shall cease and all of the rights, privileges, powers,
franchises, properties, assets, liabilities and obligations of ALFC shall be
vested in and assumed by FFC. As part of the Merger, each share of ALFC Common
7
Stock will be converted into the right to receive the Merger Consideration
pursuant to the terms of Article III hereof. Immediately after the Merger,
Atlantic Liberty Savings, F.A. shall merge with and into Flushing Savings Bank,
FSB, with Flushing Savings Bank, FSB as the resulting institution.
2.2 Closing; Effective Time.
Subject to the satisfaction or waiver of all conditions to closing
contained in Article IX hereof, the Closing shall occur no later than five
business days following the latest to occur of (i) the receipt of all required
Regulatory Approvals, and the expiration of any applicable waiting periods, (ii)
the approval of the Merger by the stockholders of ALFC, or (iii) at such other
date or time upon which FFC and ALFC mutually agree (the "Closing"). The Merger
shall be effected by the filing of a certificate of merger with the Delaware
Office of the Secretary of State on the day of the Closing (the "Closing Date"),
in accordance with the DGCL. The "Effective Time" means the date and time upon
which the certificate of merger is filed with the Delaware Office of the
Secretary of State, or as otherwise stated in the certificate of merger, in
accordance with the DGCL.
2.3 Certificate of Incorporation and Bylaws.
The Certificate of Incorporation and Bylaws of FFC as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation and Bylaws
of the Surviving Corporation, until thereafter amended as provided therein and
by applicable law.
2.4 Directors and Officers of Surviving Corporation.
The directors of FFC immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation. Until changed in accordance with the Certificate of Incorporation
and Bylaws of the Surviving Corporation, the officers of FFC immediately prior
to the Effective Time shall be the initial officers of Surviving Corporation, in
each case until their respective successors are duly elected or appointed and
qualified.
2.5 Effects of the Merger.
At and after the Effective Time, the Merger shall have the effects as set
forth in the DGCL.
2.6 Tax Consequences.
It is intended that the Merger shall constitute a reorganization within the
meaning of Section 368(a) of the Code, and that this Agreement shall constitute
a "plan of reorganization" as that term is used in Sections 354 and 361 of the
Code. From and after the date of this Agreement and until the Closing, each
party hereto shall use its reasonable best efforts to cause the Merger to
qualify, and will not knowingly take any action, cause any action to be taken,
fail to take any action or cause any action to fail to be taken which action or
failure to act could prevent the Merger from qualifying as a reorganization
under Section 368(a) of the Code. Following the Closing, neither FFC, ALFC nor
any of their Affiliates shall knowingly take any action, cause any action to be
taken, fail to take any action or cause any action to fail to be taken, which
action or failure to act could cause the Merger to fail to qualify as a
reorganization under Section 368(a) of the Code. FFC and ALFC each hereby agrees
to deliver certificates substantially in compliance with IRS published advance
ruling guidelines, with customary exceptions and modifications thereto, to
enable counsel to deliver the legal opinions contemplated by Section 9.1.6,
which certificates shall be effective as of the date of such opinions.
8
2.7 Possible Alternative Structures.
Notwithstanding anything to the contrary contained in this Agreement and
subject to the satisfaction of the conditions set forth in Article IX, prior to
the Effective Time FFC shall be entitled to revise the structure of the Merger
described in Section 2.1 hereof, provided that (i) FFC shall have received an
opinion of counsel to FFC that there are no adverse Federal or state income tax
consequences to ALFC stockholders as a result of the modification; (ii) the
consideration to be paid to the holders of ALFC Common Stock under this
Agreement is not thereby changed in kind or value or reduced in amount; and
(iii) such modification will not delay materially, or jeopardize receipt of any
required regulatory approvals or other consents and approvals relating to the
consummation of the Merger or otherwise cause any condition to closing not to be
capable of being fulfilled. The parties hereto agree to appropriately amend this
Agreement and any related documents in order to reflect any such revised
structure.
2.8 Additional Actions.
If, at any time after the Effective Time, FFC shall consider or be advised
that any further deeds, assignments or assurances in law or any other acts are
necessary or desirable to (i) vest, perfect or confirm, of record or otherwise,
in FFC its right, title or interest in, to or under any of the rights,
properties or assets of ALFC or Atlantic Liberty Savings, F.A., or (ii)
otherwise carry out the purposes of this Agreement, ALFC and its officers and
directors shall be deemed to have granted to FFC an irrevocable power of
attorney to execute and deliver all such deeds, assignments or assurances in law
or take any other acts as are necessary or desirable to (a) vest, perfect or
confirm, of record or otherwise, in FFC its right, title or interest in, to or
under any of the rights, properties or assets of ALFC or Atlantic Liberty
Savings, F.A. or (b) otherwise carry out the purposes of this Agreement, and the
officers and directors of FFC are authorized in the name of ALFC or Atlantic
Liberty Savings, F.A. or otherwise to take any and all such action.
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion of ALFC Common Stock; Merger Consideration.
At the Effective Time, by virtue of the Merger and without any action on
the part of FFC, ALFC or the holders of any of the shares of ALFC Common Stock,
the Merger shall be effected in accordance with the following terms:
3.1.1 Each share of FFC Common Stock that is issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
following the Effective Time and shall be unchanged by the Merger.
3.1.2 All shares of ALFC Common Stock held in the treasury of ALFC and each
share of ALFC Common Stock owned by FFC or any direct or indirect wholly owned
subsidiary of FFC or of ALFC immediately prior to the Effective Time (other than
shares held in a fiduciary capacity or in connection with debts previously
contracted) ("Treasury Stock") shall, at the Effective Time, cease to exist, and
the certificates for such shares shall be canceled as promptly as practicable
thereafter, and no payment or distribution shall be made in consideration
therefor.
3.1.3 Each share of ALFC Common Stock issued and outstanding immediately
prior to the Effective Time (other than Treasury Stock and Dissenting Shares)
shall become and be converted into, as provided in and subject to the
9
limitations set forth in this Agreement, the right to receive at the election of
the holder thereof as provided in Section 3.2 either (i) $24.00 in cash (the
"Cash Consideration"); (ii) 1.4300 shares (the "Exchange Ratio") of FFC Common
Stock (the "Stock Consideration"); or (iii) a combination of the Cash
Consideration and the Stock Consideration, as provided in Section 3.2 (the
"Cash/Stock Consideration"). The Cash Consideration and the Stock Consideration
are sometimes referred to herein collectively as the "Merger Consideration."
3.1.4 Each outstanding share of ALFC Common Stock the holder of which has
perfected his right to dissent under the DGCL and has not effectively withdrawn
or lost such right as of the Effective Time (the "Dissenting Shares") shall not
be converted into or represent a right to receive the Merger Consideration
hereunder, and the holder thereof shall be entitled only to such rights as are
granted by the DGCL. ALFC shall give FFC prompt notice upon receipt by ALFC of
any such demands for payment of the fair value of such shares of ALFC Common
Stock and of withdrawals of such notice and any other instruments provided
pursuant to applicable law (any stockholder duly making such demand being
hereinafter called a "Dissenting Stockholder"), and FFC shall have the right to
participate in all negotiations and proceedings with respect to any such
demands. ALFC shall not, except with the prior written consent of FFC,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment, or waive any failure to timely deliver a written demand
for appraisal or the taking of any other action by such Dissenting Stockholder
as may be necessary to perfect appraisal rights under the DGCL. Any payments
made in respect of Dissenting Shares shall be made by the Surviving Company.
3.1.5 If any Dissenting Stockholder shall effectively withdraw or lose
(through failure to perfect or otherwise) his right to such payment at or prior
to the Effective Time, such holder's shares of ALFC Common Stock shall be
converted into a right to receive the Merger Consideration in accordance with
the applicable provisions of this Agreement. If such holder shall effectively
withdraw or lose (through failure to perfect or otherwise) his right to such
payment after the Effective Time (or the Election Deadline, as defined below),
each share of ALFC Common Stock of such holder shall be treated as a
Non-Election Share.
3.1.6 After the Effective Time, shares of ALFC Common Stock shall no longer
be outstanding and shall automatically be canceled and shall cease to exist, and
shall thereafter by operation of this section be the right to receive the Merger
Consideration.
3.1.7 In the event FFC changes (or establishes a record date for changing)
the number of, or provides for the exchange of, shares of FFC Common Stock
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend, recapitalization, reclassification, or similar transaction with
respect to the outstanding FFC Common Stock and the record date therefor shall
be prior to the Effective Time, the Exchange Ratio shall be proportionately and
appropriately adjusted; provided, that no such adjustment shall be made with
regard to FFC Common Stock if FFC issues additional shares of FFC Common Stock
and receives fair market value consideration for such shares.
3.2 Election Procedures.
3.2.1 Holders of ALFC Common Stock may elect to receive shares of FFC
Common Stock or cash (in either case without interest) in exchange for their
shares of ALFC Common Stock in accordance with the following procedures,
provided that, in the aggregate, and subject to the provisions of Section 3.2.6,
65% of the total number of shares of ALFC Common Stock issued and outstanding at
the Effective Time, including any Dissenting Shares but excluding any Treasury
Stock (the "Stock Conversion Number"), shall be converted into the Stock
Consideration and the remaining outstanding shares of ALFC Common Stock shall be
10
converted into the Cash Consideration. Shares of ALFC Common Stock as to which a
Cash Election (including, pursuant to a Mixed Election) has been made are
referred to herein as "Cash Election Shares." Shares of ALFC Common Stock as to
which a Stock Election has been made (including, pursuant to a Mixed Election)
are referred to as "Stock Election Shares." Shares of ALFC Common Stock as to
which no election has been made (or as to which an Election Form is not returned
properly completed) are referred to herein as "Non-Election Shares." The
aggregate number of shares of ALFC Common Stock with respect to which a Stock
Election has been made is referred to herein as the "Stock Election Number." Any
Dissenting Shares shall be deemed to be Cash Election Shares, and the holders
thereof shall in no event receive consideration comprised of FFC Common Stock
with respect to such shares.
3.2.2 An election form and other appropriate and customary transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper delivery of such
Certificates to the Exchange Agent), in such form as ALFC and FFC shall mutually
agree ("Election Form"), shall be mailed 40 days prior to the anticipated
Effective Time or on such earlier date as FFC and ALFC shall mutually agree (the
"Mailing Date") to each holder of record of ALFC Common Stock as of five
business days prior to the Mailing Date (the "Election Form Record Date"). Each
Election Form shall permit such holder, subject to the allocation and election
procedures set forth in this Section 3.2, (i) to elect to receive the Cash
Consideration for all of the shares of ALFC Common Stock held by such holder (a
"Cash Election"), in accordance with Section 3.1.3, (ii) to elect to receive the
Stock Consideration for all of such shares (a "Stock Election"), in accordance
with Section 3.1.3, (iii) to elect to receive the Stock Consideration for a part
of such holder's ALFC Common Stock and the Cash Consideration for the remaining
part of such holder's ALFC Common Stock (a "Mixed Election"), or (iv) to
indicate that such record holder has no preference as to the receipt of cash or
FFC Common Stock for such shares (a "Non-Election"). A holder of record of
shares of ALFC Common Stock who holds such shares as nominee, trustee or in
another representative capacity (a "Representative") may submit multiple
Election Forms, provided that each such Election Form covers all the shares of
ALFC Common Stock held by such Representative for a particular beneficial owner.
Any shares of ALFC Common Stock with respect to which the holder thereof shall
not, as of the Election Deadline, have made an election by submission to the
Exchange Agent of an effective, properly completed Election Form shall be deemed
Non-Election Shares. All Dissenting Shares shall be deemed shares subject to a
Cash Election, and with respect to such shares the holders thereof shall in no
event receive consideration comprised of FFC Common Stock, subject to Section
3.1.5 hereof.
3.2.3 To be effective, a properly completed Election Form shall be
submitted to the Exchange Agent on or before 5:00 p.m., New York City time, on
the 20th day following the Mailing Date (or such other time and date as FFC and
ALFC may mutually agree) (the "Election Deadline"); provided, however, that the
Election Deadline may not occur on or after the Closing Date; and provided
further that the Election Deadline may not occur prior to the seventh business
day after receipt of all Regulatory Approvals (excluding the expiration of any
applicable waiting periods). ALFC shall make available up to two separate
Election Forms, or such additional Election Forms as FFC may permit, to all
persons who become holders (or beneficial owners) of ALFC Common Stock between
the Election Form Record Date and the close of business on the business day
prior to the Election Deadline. ALFC shall provide to the Exchange Agent all
information reasonably necessary for it to perform as specified herein. An
election shall have been properly made only if the Exchange Agent shall have
actually received a properly completed Election Form by the Election Deadline.
An Election Form shall be deemed properly completed only if accompanied by one
or more Certificates (or customary affidavits and indemnification regarding the
loss or destruction of such Certificates or the guaranteed delivery of such
Certificates) representing all shares of ALFC Common Stock covered by such
Election Form, together with duly executed transmittal materials included with
the Election Form. If an ALFC stockholder either (i) does not submit a properly
completed Election Form in a timely fashion or (ii) revokes its Election Form
prior to the Election Deadline, the shares of ALFC Common Stock held by such
stockholder shall be designated as Non-Election Shares. Any Election Form may be
revoked or changed by the person submitting such Election Form to the Exchange
Agent by written notice to the Exchange Agent only if such notice of revocation
or change is actually received by the Exchange Agent at or prior to the Election
11
Deadline. FFC shall cause the Certificate or Certificates relating to any
revoked Election Form to be promptly returned without charge to the person
submitting the Election Form to the Exchange Agent. Subject to the terms of this
Agreement and of the Election Form, the Exchange Agent shall have discretion to
determine when any election, modification or revocation is received and whether
any such election, modification or revocation has been properly made.
3.2.4 If the Stock Election Number exceeds the Stock Conversion Number,
then all Cash Election Shares and all Non-Election Shares shall be converted
into the right to receive the Cash Consideration, and, subject to Section 3.2.7
hereof, each holder of Stock Election Shares will be entitled to receive the
Stock Consideration only with respect to that number of Stock Election Shares
held by such holder equal to the product obtained by multiplying (x) the number
of Stock Election Shares held by such holder by (y) a fraction, the numerator of
which is the Stock Conversion Number and the denominator of which is the Stock
Election Number, with the remaining number of such holder's Stock Election
Shares being converted into the right to receive the Cash Consideration.
3.2.5 If the Stock Election Number is less than the Stock Conversion Number
(the amount by which the Stock Conversion Number exceeds the Stock Election
Number being referred to herein as the "Shortfall Number"), then all Stock
Election Shares shall be converted into the right to receive the Stock
Consideration and the Non-Election Shares and Cash Election Shares shall be
treated in the following manner:
(A)if the Shortfall Number is less than or equal to the number of
Non-Election Shares, then all Cash Election Shares shall be converted into the
right to receive the Cash Consideration and, subject to Section 3.2.7 hereof,
each holder of Non-Election Shares shall receive the Stock Consideration in
respect of that number of Non-Election Shares held by such holder equal to the
product obtained by multiplying (x) the number of Non-Election Shares held by
such holder by (y) a fraction, the numerator of which is the Shortfall Number
and the denominator of which is the total number of Non-Election Shares, with
the remaining number of such holder's Non-Election Shares being converted into
the right to receive the Cash Consideration; or
(B)if the Shortfall Number exceeds the number of Non-Election Shares, then
all Non- Election Shares shall be converted into the right to receive the Stock
Consideration, and, subject to Section 3.2.7 hereof, each holder of Cash
Election Shares shall receive the Stock Consideration in respect of that number
of Cash Election Shares held by such holder equal to the product obtained by
multiplying (x) the number of Cash Election Shares held by such holder by (y) a
fraction, the numerator of which is the amount by which (1) the Shortfall Number
exceeds (2) the total number of Non-Election Shares and the denominator of which
is the total number of Cash Election Shares, with the remaining number of such
holder's Cash Election Shares being converted into the right to receive the Cash
Consideration.
3.2.6 No Fractional Shares. Notwithstanding anything to the contrary
contained herein, no certificates or scrip representing fractional shares of FFC
Common Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution with respect to FFC Common Stock shall be payable on or
with respect to any fractional share interest, and such fractional share
interests shall not entitle the owner thereof to vote or to any other rights of
a stockholder of FFC. In lieu of the issuance of any such fractional share, FFC
shall pay to each former holder of ALFC Common Stock who otherwise would be
entitled to receive a fractional share of FFC Common Stock, an amount in cash,
rounded to the nearest cent and without interest, equal to the product of (i)
the fraction of a share to which such holder would otherwise have been entitled
and (ii) the average of the daily closing sales prices of a share of FFC Common
Stock as reported on the NASDAQ for the five consecutive trading days
immediately preceding the Closing Date. For purposes of determining any
12
fractional share interest, all shares of ALFC Common Stock owned by a ALFC
stockholder shall be combined so as to calculate the maximum number of whole
shares of FFC Common Stock issuable to such ALFC stockholder.
3.3 Procedures for Exchange of ALFC Common Stock.
3.3.1 FFC to Make Merger Consideration Available. After the Election
Deadline and no later than the day prior to the Closing Date, FFC shall deposit,
or shall cause to be deposited, with the Exchange Agent for the benefit of the
holders of ALFC Common Stock, for exchange in accordance with this Section 3.3,
certificates representing the shares of FFC Common Stock and an aggregate amount
of cash sufficient to pay the aggregate amount of cash payable pursuant to this
Article III (including the estimated amount of cash to be paid in lieu of
fractional shares of ALFC Common Stock) (such cash and certificates for shares
of FFC Common Stock, together with any dividends or distributions with respect
thereto (without any interest thereon) being hereinafter referred to as the
"Exchange Fund").
3.3.2 Exchange of Certificates. FFC shall take all steps necessary to cause
the Exchange Agent to mail, within five business days after the Effective Time,
to each holder of a Certificate or Certificates who has not previously
surrendered such Certificates with an Election Form, a form letter of
transmittal (which shall be subject to the reasonable approval of ALFC) for
return to the Exchange Agent and instructions for use in effecting the surrender
of the Certificates in exchange for the Merger Consideration and cash in lieu of
fractional shares into which the ALFC Common Stock represented by such
Certificates shall have been converted as a result of the Merger, if any. The
letter of transmittal shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent. Upon proper surrender of a Certificate for
exchange and cancellation to the Exchange Agent, together with a properly
completed letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration to
which such holder of ALFC Common Stock shall have become entitled pursuant to
Section 3.1.3 hereof, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on any Cash Consideration or any
cash payable in lieu of fractional shares or any unpaid dividends and
distributions, if any, payable to holders of Certificates.
3.3.3 Rights of Certificate Holders after the Effective Time. The holder of
a Certificate that prior to the Merger represented issued and outstanding ALFC
Common Stock shall have no rights, after the Effective Time, with respect to
such ALFC Common Stock except to surrender the Certificate in exchange for the
Merger Consideration as provided in this Agreement. No dividends or other
distributions declared after the Effective Time with respect to FFC Common Stock
shall be paid to the holder of any unsurrendered Certificate until the holder
thereof shall surrender such Certificate in accordance with this Section 3.3.
After the surrender of a Certificate in accordance with this Section 3.3, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of FFC Common Stock represented by such
Certificate.
3.3.4 Surrender by Persons Other than Record Holders. If the Person
surrendering a Certificate and signing the accompanying letter of transmittal is
not the record holder thereof, then it shall be a condition of the payment of
the Merger Consideration that: (i) such Certificate is properly endorsed to such
Person or is accompanied by appropriate stock powers, in either case signed
exactly as the name of the record holder appears on such Certificate, and is
otherwise in proper form for transfer, or is accompanied by appropriate evidence
of the authority of the Person surrendering such Certificate and signing the
letter of transmittal to do so on behalf of the record holder; and (ii) the
person requesting such exchange shall pay to the Exchange Agent in advance any
transfer or other taxes required by reason of the payment to a Person other than
the registered holder of the Certificate surrendered, or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
13
3.3.5 Closing of Transfer Books. From and after the Effective Time, there
shall be no transfers on the stock transfer books of ALFC of the ALFC Common
Stock that was outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates representing such shares are presented for
transfer to the Exchange Agent, they shall be exchanged for the Merger
Consideration and canceled as provided in this Section 3.3.
3.3.6 Return of Exchange Fund. At any time following the six month period
after the Effective Time, FFC shall be entitled to require the Exchange Agent to
deliver to it any portions of the Exchange Fund which had been made available to
the Exchange Agent and not disbursed to holders of Certificates (including,
without limitation, all interest and other income received by the Exchange Agent
in respect of all funds made available to it), and thereafter such holders shall
be entitled to look to FFC (subject to abandoned property, escheat and other
similar laws) with respect to any Merger Consideration that may be payable upon
due surrender of the Certificates held by them. Notwithstanding the foregoing,
neither FFC nor the Exchange Agent shall be liable to any holder of a
Certificate for any Merger Consideration delivered in respect of such
Certificate to a public official pursuant to any abandoned property, escheat or
other similar law.
3.3.7 Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by FFC, the posting by such person of a bond in such
amount as FFC may reasonably direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration deliverable in respect thereof.
3.3.8 Withholding. FFC or the Exchange Agent will be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement or
the transactions contemplated hereby to any holder of ALFC Common Stock such
amounts as FFC (or any Affiliate thereof) or the Exchange Agent are required to
deduct and withhold with respect to the making of such payment under the Code,
or any applicable provision of U.S. federal, state, local or non-U.S. tax law.
To the extent that such amounts are properly withheld by FFC or the Exchange
Agent, such withheld amounts will be treated for all purposes of this Agreement
as having been paid to the holder of the ALFC Common Stock in respect of whom
such deduction and withholding were made by FFC or the Exchange Agent.
3.4 Treatment of ALFC Options.
3.4.1 At the Effective Time, each option to purchase a share of ALFC Common
Stock that has been granted pursuant to the ALFC Stock Benefit Plan (the "ALFC
Option Plan") and that is outstanding and unexercised at the Effective Time
(whether or not such option is otherwise vested or exercisable) (each, an
"Outstanding ALFC Option") shall be treated as follows:
(i) Option Cashout. To the extent that the option holder does not
elect to convert the options pursuant to Section 3.4.1(ii), such options
shall be cancelled and shall cease to be exercisable. In consideration for
such cancellation, FFC shall, with respect to each Outstanding ALFC Option,
pay to the holder thereof an amount equal to the excess (if any) of (a) the
Cash Consideration over (b) the price at which the holder may acquire a
share of ALFC Common Stock upon exercise of such Outstanding ALFC Option
(the "Option Cashout Payment"). FFC shall make such payment as soon as
practicable following the Effective Time or, if later in the case of any
holder of an Outstanding ALFC Option, the date on which such holder
delivers to FFC his written acceptance of an Option Cashout Payment as full
and complete consideration for the cancellation of each Outstanding ALFC
14
Option held by him. ALFC shall take such action as is necessary or
appropriate under the terms of ALFC's Option Plan to convert each
Outstanding ALFC Option, as of the Effective Time, into the right to
receive an Option Cashout Payment upon the terms and conditions set forth
herein. Payment hereunder shall be subject to withholding for applicable
federal, state and local taxes; or
(ii) Option Conversion. Each option holder may, by written notice to
FFC received by FFC not less than at least 10 business days prior to the
Effective Time, elect to have all or a portion of such holder's outstanding
ALFC Options converted into options ("FFC Options") to purchase shares of
FFC Common Stock. Any such election shall identify the Outstanding ALFC
Options to be converted into FFC Options and shall become irrevocable upon
receipt by FFC of the notice of election. The Outstanding ALFC Options
identified in each such election shall be converted automatically into
options to purchase shares of FFC Common Stock in an amount and at an
exercise price determined as provided below, and each ALFC Option shall
otherwise remain subject to the ALFC Option Plan and the agreements
evidencing grants thereunder, and any other agreements between ALFC and an
optionee regarding ALFC Options. The number of shares of FFC Common Stock
(rounded down to the nearest whole share) to be subject to the new option
shall be equal to the product of (i) the number of shares of ALFC Common
Stock subject to the Outstanding ALFC Options being converted, and (ii) the
Exchange Ratio. The exercise price per share of FFC Common Stock under the
new option shall be equal to the quotient of the per share exercise price
of the Outstanding ALFC Option being converted divided by the Exchange
Ratio, rounded up to the next whole cent. The duration and other terms of
the new option shall be the same as the original Outstanding ALFC Options
being converted.
(iii) No payment shall be made pursuant to subsection (i) of this
Section 3.4.1 with respect to any portion of an Outstanding ALFC Option
that is converted into an FFC Option under subsection (ii) of this Section
3.4.1. ALFC shall use its reasonable best efforts to obtain the written
acknowledgement of each holder of a then Outstanding ALFC Option with
regard to the treatment of such Outstanding ALFC Option hereunder. FFC
shall have the right to change the manner of payment under this Section
3.4.1 provided that the consideration to be paid to the holders of
Outstanding ALFC Options pursuant thereto is not reduced in amount.
3.4.2 As of the Effective Time, FFC shall assume the obligations and
succeed to the rights of ALFC under the ALFC Option Plan. ALFC and FFC agree
that prior to the Effective Time the ALFC Option Plan shall be amended, to the
extent possible without requiring stockholder approval of such amendments, (i)
if and to the extent necessary and practicable, to reflect the transactions
contemplated by this Agreement, including the conversion of the Outstanding ALFC
Options pursuant to Section 3.4.1 and the substitution of FFC for ALFC
thereunder to the extent appropriate to effectuate the assumption of such ALFC
Option Plan by FFC and (ii) to preclude any automatic or formulaic grant of
options thereunder on or after the date hereof. From and after the Effective
Time, all references to ALFC (other than references to a "Change in Control" of
ALFC) in the ALFC Option Plan and in each agreement evidencing any award of ALFC
Options shall be deemed to refer to FFC, unless FFC determines otherwise.
3.4.3 FFC shall take all action necessary or appropriate to have available
for issuance or transfer a sufficient number of shares of FFC Common Stock for
delivery upon exercise of the Outstanding ALFC Options being converted pursuant
to Section 3.4.1(ii). Promptly after the Effective Time, FFC shall prepare and
file with the SEC a post-effective amendment converting the Form S-4 to a Form
S-8 (or file such other appropriate form) registering a number of shares of FFC
Common Stock necessary to fulfill FFC's obligations under this Section 3.4.3.
15
3.5 Bank Merger.
ALFC and FFC shall use their best efforts to cause Atlantic Liberty
Savings, F.A. to merge with and into Flushing Savings Bank, FSB, with Flushing
Savings Bank, FSB as the surviving institution, concurrently with, or as soon as
practicable after, the Effective Time. Following the execution and delivery of
this Agreement, FFC will cause Flushing Savings Bank, FSB, and ALFC will cause
Atlantic Liberty Savings, F.A., to execute and deliver a Plan of Bank Merger
substantially in the form attached to this Agreement as Exhibit A.
3.6 Reservation of Shares.
FFC shall reserve for issuance a sufficient number of shares of the FFC
Common Stock for the purpose of issuing shares of FFC Common Stock to the ALFC
stockholders in accordance with this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALFC
ALFC represents and warrants to FFC that the statements contained in this
Article IV are correct as of the date of this Agreement and will be correct as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article IV), except
as set forth in the ALFC Disclosure Schedule delivered by ALFC to FFC on the
date hereof, and except as to any representation or warranty which specifically
relates to an earlier date. ALFC has made a good faith effort to ensure that the
disclosure on each schedule of the ALFC Disclosure Schedule corresponds to the
section referenced herein. However, for purposes of the ALFC Disclosure
Schedule, any item disclosed on any schedule therein is deemed to be fully
disclosed with respect to all schedules under which such item may be relevant as
and to the extent that it is reasonably clear on the face of such schedule that
such item applies to such other schedule. References to the Knowledge of ALFC
shall include the Knowledge of Atlantic Liberty Savings, F.A.
4.1 Standard.
No representation or warranty of ALFC contained in this Article IV shall be
deemed untrue or incorrect, and ALFC shall not be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent with
any paragraph of Article IV, has had or is reasonably expected to have a
Material Adverse Effect; provided, however, that the foregoing standard shall
not apply to representations and warranties contained in Sections 4.2, 4.3 and
4.4, which shall be deemed untrue, incorrect and breached if they are not true
and correct in all material respects.
4.2 Organization.
4.2.1 ALFC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is duly registered as a
savings and loan holding company under the HOLA. ALFC has full corporate power
and authority to carry on its business as now conducted. ALFC is duly licensed
or qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification.
16
4.2.2 Atlantic Liberty Savings, F.A. is a federally chartered stock savings
association duly organized, validly existing and in good standing. The deposits
of Atlantic Liberty Savings, F.A. are insured by the FDIC to the fullest extent
permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid by Atlantic Liberty Savings, F.A. when due.
Atlantic Liberty Savings, F.A. is a member in good standing of the FHLB and owns
the requisite amount of stock therein.
4.2.3 ALFC Disclosure Schedule 4.2.3 sets forth each ALFC Subsidiary. Each
ALFC Subsidiary is a corporation, limited liability company or other legal
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation or organization.
4.2.4 The respective minute books of ALFC, Atlantic Liberty Savings, F.A.
and each other ALFC Subsidiary accurately records, in all material respects, all
material corporate actions of their respective stockholders and boards of
directors (including committees).
4.2.5 Prior to the date of this Agreement, ALFC has made available to FFC
true and correct copies of the certificate of incorporation or charter and
bylaws of ALFC, Atlantic Liberty Savings, F.A. and each other ALFC Subsidiary.
4.3 Capitalization.
4.3.1 The authorized capital stock of ALFC consists of 6,000,000 shares of
ALFC Common Stock, of which 1,682,347 shares are outstanding, validly issued,
fully paid and nonassessable and free of preemptive rights, and 500,000 shares
of preferred stock, $0.10 par value ("ALFC Preferred Stock"), none of which are
outstanding. There are 28,637 shares of ALFC Common Stock held by ALFC as
treasury stock. Neither ALFC nor any ALFC Subsidiary has or is bound by any
Rights of any character relating to the purchase, sale or issuance or voting of,
or right to receive dividends or other distributions on any shares of ALFC
Common Stock or any other security of ALFC or any securities representing the
right to vote, purchase or otherwise receive any shares of ALFC Common Stock or
any other security of ALFC other than as set forth in Disclosure Schedule
4.3.1(a). Disclosure Schedule 4.3.1(a) sets forth: the name of each holder of an
award granted under any ALFC Stock Benefit Plan, identifying the nature of the
award; as to options to purchase ALFC Common Stock, the number of shares each
such individual may acquire pursuant to the exercise of such options, the grant,
vesting and expiration dates, and the exercise price relating to the options
held; and the names of each holder of an outstanding restricted stock award, the
number of shares subject to each award, and the grant and vesting dates.
4.3.2 ALFC owns all of the capital stock of Atlantic Liberty Savings, F.A.,
free and clear of any lien or encumbrance. Except for the ALFC Subsidiaries and
as set forth in ALFC Disclosure Schedule 4.3.2, ALFC does not possess, directly
or indirectly, any material equity interest in any corporate entity, except for
equity interests held in the investment portfolios of ALFC or any ALFC
Subsidiary, equity interests held by ALFC Subsidiaries in a fiduciary capacity,
and equity interests held in connection with the lending activities of ALFC
Subsidiaries, including stock in the FHLB. Either ALFC or Atlantic Liberty
Savings, F.A. owns all of the outstanding shares of capital stock of each ALFC
Subsidiary free and clear of all liens, security interests, pledges, charges,
encumbrances, agreements and restrictions of any kind or nature.
4.3.3 To ALFC's Knowledge, other than the ALFC ESOP and except as set forth
on ALFC Disclosure Schedule 4.3.3, no Person is the beneficial owner (as defined
in Section 13(d) of the Exchange Act) of 5% or more of the outstanding shares of
ALFC Common Stock.
17
4.3.4 No bonds, debentures, notes or other indebtedness having the right to vote
on any matters on which ALFC's stockholders may vote has been issued by ALFC and
are outstanding.
4.4 Authority; No Violation.
4.4.1 ALFC has full corporate power and authority to execute and deliver
this Agreement and, subject to the receipt of the Regulatory Approvals described
in Section 8.3, the approval of this Agreement by ALFC's stockholders and the
amendment of Section 9 of the Federal Stock Charter of Atlantic Liberty Savings,
F.A. (it being understood that Atlantic Liberty Savings, F.A. will take such
action to amend Section 9 of its Federal Stock Charter prior to the Closing
Date), to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by ALFC and the completion by ALFC of the
transactions contemplated hereby, up to and including the Merger, have been duly
and validly approved by the Board of Directors of ALFC. This Agreement has been
duly and validly executed and delivered by ALFC, and subject to approval by the
stockholders of ALFC and receipt of the Regulatory Approvals, constitutes the
valid and binding obligation of ALFC, enforceable against ALFC in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally, and subject, as to enforceability, to
general principles of equity.
4.4.2 Subject to compliance by FFC with the terms and conditions of this
Agreement, (A) the execution and delivery of this Agreement by ALFC, (B) subject
to receipt of Regulatory Approvals, and ALFC's and FFC's compliance with any
conditions contained therein, and subject to the receipt of the approval of the
stockholders of ALFC, the consummation of the transactions contemplated hereby,
and (C) compliance by ALFC with any of the terms or provisions hereof will not
(i) conflict with or result in a breach of any provision of the Certificate of
Incorporation or Bylaws of ALFC or any ALFC Subsidiary or the Federal Stock
Charter and Bylaws of Atlantic Liberty Savings, F.A., subject to amendment of
Section 9 of the Federal Stock Charter of Atlantic Liberty Savings, F.A. (it
being understood that Atlantic Liberty Savings, F.A. will take such action to
amend Section 9 of its Federal Stock Charter prior to the Closing Date); (ii)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to ALFC or any ALFC Subsidiary or any of their
respective properties or assets; or (iii) violate, conflict with, result in a
breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of, accelerate the performance required by, or result in a right
of termination or acceleration or the creation of any lien, security interest,
charge or other encumbrance upon any of the properties or assets of ALFC or
Atlantic Liberty Savings, F.A. under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement
or other investment or obligation to which ALFC or Atlantic Liberty Savings,
F.A. is a party (but not with respect to any benefit plan), or by which they or
any of their respective properties or assets may be bound or affected, except
for such violations, conflicts, breaches or defaults under clause (ii) or (iii)
hereof which, either individually or in the aggregate, will not have a Material
Adverse Effect on ALFC and the ALFC Subsidiaries taken as a whole.
4.5 Consents.
Except for the Regulatory Approvals referred to in Section 8.3 hereof and
compliance with any conditions contained therein, the approval of this Agreement
by the requisite vote of the stockholders of ALFC, and with respect to the
amendment of Section 9 of the Federal Stock Charter of Atlantic Liberty Savings,
F.A., no consents, waivers or approvals of, or filings or registrations with,
any Governmental Entity or Bank Regulator are necessary, and, to ALFC's
Knowledge, no consents, waivers or approvals of, or filings or registrations
with, any other third parties are necessary, in connection with (a) the
execution and delivery of this Agreement by ALFC, and the completion by ALFC of
18
the Merger or (b) the execution and delivery of the Plan of Bank Merger by
Atlantic Liberty Savings, F.A. and the completion by Atlantic Liberty Savings,
F.A. of the Bank Merger. ALFC has no reason to believe that (i) any required
Regulatory Approvals or other required consents or approvals will not be
received, or that (ii) any public body or authority, the consent or approval of
which is not required or to which a filing is not required, will object to the
completion of the transactions contemplated by this Agreement.
4.6 Financial Statements.
4.6.1 ALFC has previously made available to FFC the ALFC Financial
Statements. The ALFC Financial Statements have been prepared in accordance with
GAAP, and (including the related notes where applicable) fairly present in each
case in all material respects (subject in the case of the unaudited interim
statements to normal year-end adjustments) the consolidated financial position,
results of operations and cash flows of ALFC and the ALFC Subsidiaries on a
consolidated basis as of and for the respective periods ending on the dates
thereof, in accordance with GAAP during the periods involved, except as
indicated in the notes thereto, or in the case of unaudited statements, as
permitted by Form 10-QSB.
4.6.2 At the date of each balance sheet included in the ALFC Financial
Statements, ALFC did not have any liabilities, obligations or loss contingencies
of any nature (whether absolute, accrued, contingent or otherwise) of a type
required to be reflected in such ALFC Financial Statements or in the footnotes
thereto which are not fully reflected or reserved against therein or fully
disclosed in a footnote thereto, except for liabilities, obligations and loss
contingencies which are not material individually or in the aggregate or which
are incurred in the ordinary course of business, consistent with past practice,
and except for liabilities, obligations and loss contingencies which are within
the subject matter of a specific representation and warranty herein and subject,
in the case of any unaudited statements, to normal, recurring audit adjustments
and the absence of footnotes.
4.7 Taxes.
4.7.1 (i) ALFC, each ALFC Subsidiary and the ALFC Group has filed or caused
to be filed, and with respect to Tax Returns due between the date of this
Agreement and the date the Effective Time occurs, will timely file (including
any applicable extensions) all Tax Returns required to be filed by the Code or
by applicable state, local or foreign Tax laws and all such Tax Returns are, or
in the case of such Tax Returns not yet filed, will be, true, complete and
correct in all material respects, and (ii) all Taxes of ALFC, the ALFC
Subsidiaries and the ALFC Group (whether or not reflected on any such Tax
Returns) attributable to a Pre-Effective Time Tax Period have been, or in the
case of Taxes the due date for payment of which is between the date of this
Agreement and the date the Effective Time occurs, timely paid in full.
4.7.2 The most recent audited financial statements for ALFC reflect an
adequate reserve for all Taxes payable by ALFC and the ALFC Subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements, and, in the case of Taxes owed as of the date hereof, an adequate
reserve is (and until the date the Effective Time occurs will continue to be)
reflected in the accruals for Taxes payable on the Balance Sheet, other than
accruals established to reflect timing differences and accruals reflected only
in the notes thereto.
4.7.3 There are no liens for Taxes with respect to any of the assets or
properties of ALFC or any ALFC Subsidiary.
4.7.4 No material Tax Return of ALFC, any ALFC Subsidiary or the ALFC Group
is under audit or examination by any other Taxing Authority, and no notice of
such an audit or examination has been received by ALFC or any ALFC Subsidiary.
19
4.7.5 Each deficiency, if any, resulting from any audit or examination
relating to Taxes by any Taxing Authority has been timely paid. No issues
relating to Taxes were raised by the relevant Taxing Authority in any completed
audit or examination that can reasonably be expected to recur in a later taxable
period. The relevant statute of limitations is closed with respect to the
Federal, foreign and material state and local Tax Returns of ALFC, each ALFC
Subsidiary and the ALFC Group for all years through 2001.
4.7.6 None of ALFC, any ALFC Subsidiary or the ALFC Group is a party to or
is bound by any Tax sharing agreement, Tax indemnity obligation or similar
agreement, arrangement or practice with respect to Taxes (including, without
limitation, any advance pricing agreement, closing agreement or other agreement
relating to Taxes with any Taxing Authority), other than as required by the OTS
in connection with Atlantic Liberty Savings, F.A.'s mutual to stock conversion.
4.7.7 Neither ALFC nor any ALFC Subsidiary will be required to include in a
taxable period ending after the date of the Effective Time any taxable income
attributable to income that accrued, but was not recognized, in a Pre-Effective
Time Tax Period (or the portion of a Straddle Period allocable to the
Pre-Effective Time Tax Period) as a result of an adjustment under Section 481 of
the Code, the installment method of accounting, the long-term contract method of
accounting, the cash method of accounting, any comparable provision of state,
local, or foreign Tax law, or for any other reason.
4.7.8 There are no outstanding agreements or waivers extending, or having
the effect of extending, the statutory period of limitation applicable to any
Tax Returns required to be filed with respect to ALFC or any ALFC Subsidiary,
and none of ALFC, any ALFC Subsidiary or the ALFC Group has requested any
extension of time within which to file any Tax Return, which return has not yet
been filed. No power of attorney with respect to any Taxes has been executed or
filed with any Taxing Authority by or on behalf of ALFC, any ALFC Subsidiary or
the ALFC Group.
4.7.9 ALFC and each of the ALFC Subsidiaries have complied in all respects
with all applicable laws relating to the payment and withholding of Taxes
(including withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402
of the Code or any comparable provision of any state, local or foreign laws) and
have, within the time and in the manner prescribed by applicable law, withheld
from and paid over to the proper Taxing Authorities all amounts required to be
so withheld and paid over under such laws.
4.7.10 Neither ALFC nor any ALFC Subsidiary has been a party to any
distribution occurring during the last three years in which the parties to such
distribution treated the distribution as one to which Section 355 of the Code
applied.
4.7.11 Neither ALFC nor any ALFC Subsidiary is a party to any "listed
transaction" as defined in Treasury Regulation Section 1.6011-4(b)(2).
4.7.12 The applicable Tax Returns of ALFC, the ALFC Subsidiaries and the
ALFC Group have disclosed any Tax positions of ALFC, the ALFC Subsidiaries or
the ALFC Group that, if not disclosed, could give rise to penalties under
Section 6662 of the Code.
4.7.13 ALFC has not been, at any time during the applicable time period set
forth in Section 897(c)(1) of the Code, a United States real property holding
company within the meaning of Section 897(c)(2) of the Code.
20
4.8 No Material Adverse Effect.
Except as disclosed in ALFC's Securities Documents filed on or prior to the
date hereof, ALFC and the ALFC Subsidiaries, taken as a whole, have not suffered
any Material Adverse Effect since March 31, 2005 and no event has occurred or
circumstance arisen since that date which, in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on ALFC and the ALFC
Subsidiaries, taken as a whole.
4.9 Material Contracts; Leases; Defaults.
4.9.1 Except as set forth in ALFC Disclosure Schedule 4.9.1, neither ALFC
nor any ALFC Subsidiary is a party to or subject to: (i) any employment,
consulting or severance contract with any past or present officer, director or
employee of ALFC or any ALFC Subsidiary, except for "at will" arrangements; (ii)
any plan or contract providing for bonuses, pensions, options, deferred
compensation, retirement payments, profit sharing or similar material
arrangements for or with any past or present officers, directors or employees of
ALFC or any ALFC Subsidiary; (iii) any collective bargaining agreement with any
labor union relating to employees of ALFC or any ALFC Subsidiary; (iv) any
agreement which by its terms limits the payment of dividends by ALFC or any ALFC
Subsidiary; (v) any instrument evidencing or related to material indebtedness
for borrowed money whether directly or indirectly, by way of purchase money
obligation, conditional sale, lease purchase, guaranty or otherwise, in respect
of which ALFC or any ALFC Subsidiary is an obligor to any person, which
instrument evidences or relates to indebtedness other than deposits, FHLB
advances, repurchase agreements, bankers' acceptances, and "treasury tax and
loan" accounts established in the ordinary course of business and transactions
in "federal funds" or which contains financial covenants or other restrictions
(other than those relating to the payment of principal and interest when due)
which would be applicable on or after the Closing Date to FFC or any FFC
Subsidiary; (vi) any other agreement, written or oral, not terminable on 60
days' notice, that obligates ALFC or any ALFC Subsidiary for the payment of more
than $25,000 annually; or (vii) any agreement (other than this Agreement),
contract, arrangement, commitment or understanding (whether written or oral)
that restricts or limits in any material way the conduct of business by ALFC or
any ALFC Subsidiary (it being understood that any non-compete or similar
provision shall be deemed material).
4.9.2 Each real estate lease that will require the consent of the lessor or
its agent as a result of the Merger or the Bank Merger by virtue of the terms of
any such lease is listed in ALFC Disclosure Schedule 4.9.2 identifying the
section of the lease that contains such prohibition or restriction. Subject to
any consents that may be required as a result of the transactions contemplated
by this Agreement, to its Knowledge, neither ALFC nor any ALFC Subsidiary is in
default in any material respect under any material contract, agreement,
commitment, arrangement, lease, insurance policy or other instrument to which it
is a party, by which its assets, business, or operations may be bound or
affected, or under which it or its assets, business, or operations receive
benefits, 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.
4.9.3 True and correct copies of agreements, contracts, arrangements and
instruments referred to in Section 4.9.1 and 4.9.2 have been made available to
FFC on or before the date hereof, are listed on ALFC Disclosure Schedule 4.9.1
and are in full force and effect on the date hereof. Except as set forth in ALFC
Disclosure Schedule 4.9.3, no plan, contract, employment agreement, termination
agreement, or similar agreement or arrangement to which ALFC or any ALFC
Subsidiary is a party or under which ALFC or any ALFC Subsidiary may be liable
contains provisions which permit an employee or independent contractor to
terminate it without cause and continue to accrue future benefits thereunder.
Except as set forth in ALFC Disclosure Schedule 4.9.3, no such agreement, plan,
21
contract, or arrangement (x) provides for acceleration in the vesting of
benefits or payments due thereunder upon the occurrence of a change in ownership
or control of ALFC or any ALFC Subsidiary or upon the occurrence of a subsequent
event; or (y) requires ALFC or any ALFC Subsidiary to provide a benefit in the
form of ALFC Common Stock or determined by reference to the value of ALFC Common
Stock.
4.10 Ownership of Property; Insurance Coverage.
4.10.1 Except as set forth in ALFC Disclosure Schedule 4.10, ALFC and each
ALFC Subsidiary has good and, as to real property, marketable title to all
material assets and properties owned by ALFC or each ALFC Subsidiary in the
conduct of its businesses, whether such assets and properties are real or
personal, tangible or intangible, including assets and property reflected in the
balance sheet contained in the most recent ALFC Financial Statements or acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of in the ordinary course of business, since the date of such
balance sheet), subject to no material encumbrances, liens, mortgages, security
interests or pledges, except (i) those items which secure liabilities for public
or statutory obligations or any discount with, borrowing from or other
obligations to FHLB, inter-bank credit facilities, reverse repurchase agreements
or any transaction by an ALFC Subsidiary acting in a fiduciary capacity, and
(ii) statutory liens for amounts not yet delinquent or which are being contested
in good faith. ALFC and the ALFC Subsidiaries, as lessee, have the right under
valid and existing leases of real and personal properties used by ALFC and the
ALFC Subsidiaries in the conduct of their businesses to occupy or use all such
properties as presently occupied and used by each of them. Such existing leases
and commitments to lease constitute or will constitute operating leases for both
tax and financial accounting purposes and the lease expense and minimum rental
commitments with respect to such leases and lease commitments are as disclosed
in all material respects in the notes to the ALFC Financial Statements.
4.10.2 With respect to all material agreements pursuant to which ALFC or
any ALFC Subsidiary has purchased securities subject to an agreement to resell,
if any, ALFC or such ALFC Subsidiary, as the case may be, has a lien or security
interest (which to ALFC's Knowledge is a valid, perfected first lien) in the
securities or other collateral securing the repurchase agreement, and the value
of such collateral equals or exceeds the amount of the debt secured thereby.
4.10.3 ALFC and each Significant Subsidiary of ALFC currently maintain
insurance considered by each of them to be reasonable for their respective
operations. Neither ALFC nor any Significant Subsidiary of ALFC has received
notice from any insurance carrier that (i) such insurance will be canceled or
that coverage thereunder will be reduced or eliminated, or (ii) premium costs
with respect to such policies of insurance will be substantially increased.
There are presently no material claims pending under such policies of insurance
and no notices have been given by ALFC or any Significant Subsidiary of ALFC
under such policies. All such insurance is valid and enforceable and in full
force and effect, and within the last three years ALFC and each Significant
Subsidiary of ALFC has received each type of insurance coverage for which it has
applied and during such periods has not been denied indemnification for any
material claims submitted under any of its insurance policies. ALFC Disclosure
Schedule 4.10.3 identifies all policies of insurance maintained by ALFC and each
Significant Subsidiary of ALFC as well as the other matters required to be
disclosed under this Section.
4.11 Legal Proceedings.
Except as set forth in ALFC Disclosure Schedule 4.11, neither ALFC nor any
ALFC Subsidiary is a party to any, and there are no pending or, to ALFC's
Knowledge, threatened legal, administrative, arbitration or other proceedings,
claims (whether asserted or unasserted), actions or governmental investigations
or inquiries of any nature, (i) against ALFC or any ALFC Subsidiary, (ii) to
which ALFC or any ALFC Subsidiary's assets are or may be subject, (iii)
22
challenging the validity or propriety of any of the transactions contemplated by
this Agreement, or (iv) which could adversely affect the ability of ALFC to
perform under this Agreement, except for any proceeding, claim, action,
investigation or inquiry referred to in clauses (i) and (ii) which, if adversely
determined, individually or in the aggregate, could not be reasonably expected
to have a Material Adverse Effect.
4.12 Compliance With Applicable Law.
4.12.1 To ALFC's Knowledge, each of ALFC and each ALFC Subsidiary is in
compliance in all material respects with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable to it, its properties, assets and deposits, its business, and
its conduct of business and its relationship with its employees, including,
without limitation, the Xxxxxxxx-Xxxxx Act of 2002, the USA Patriot Act, the
Bank Secrecy Act, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act of 1977 ("CRA"), the Home Mortgage Disclosure Act,
and all other applicable fair lending laws and other laws relating to
discriminatory business practices, and neither ALFC nor any ALFC Subsidiary has
received any written notice to the contrary.
4.12.2 Each of ALFC and each ALFC Subsidiary has all material permits,
licenses, authorizations, orders and approvals of, and has made all filings,
applications and registrations with, all Bank Regulators that are required in
order to permit it to own or lease its properties and to conduct its business as
presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the Knowledge of ALFC,
no suspension or cancellation of any such permit, license, certificate, order or
approval is threatened or will result from the consummation of the transactions
contemplated by this Agreement, subject to obtaining the approvals set forth in
Section 8.3.
4.12.3 For the period beginning January 1, 2003, neither ALFC nor any ALFC
Subsidiary has received any written notification or, to ALFC's Knowledge, any
other communication from any Bank Regulator (i) asserting that ALFC or any ALFC
Subsidiary is not in material compliance with any of the statutes, regulations
or ordinances which such Bank Regulator enforces; (ii) threatening to revoke any
license, franchise, permit or governmental authorization which is material to
ALFC or any ALFC Subsidiary; (iii) requiring or threatening to require ALFC or
any ALFC Subsidiary, or indicating that ALFC or any ALFC Subsidiary may be
required, to enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement with any federal or state governmental
agency or authority which is charged with the supervision or regulation of banks
or engages in the insurance of bank deposits restricting or limiting, or
purporting to restrict or limit, in any material respect the operations of ALFC
or any ALFC Subsidiary, including without limitation any restriction on the
payment of dividends; or (iv) directing, restricting or limiting, or purporting
to direct, restrict or limit, in any material manner the operations of ALFC or
any ALFC Subsidiary (any such notice, communication, memorandum, agreement or
order described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither ALFC nor any ALFC Subsidiary has consented to or entered
into any Regulatory Agreement that is currently in effect. The most recent
regulatory rating given to Atlantic Liberty Savings, F.A. as to compliance with
the CRA is satisfactory or better.
4.13 Employee Benefit Plans.
4.13.1 ALFC Disclosure Schedule 4.13.1 includes a descriptive list of all
existing bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, stock appreciation, phantom stock,
severance, welfare benefit plans, fringe benefit plans, employment, severance
and change in control agreements and all other material benefit practices,
policies and arrangements maintained by ALFC or any ALFC Subsidiary in which any
employee or former employee, consultant or former consultant or director or
23
former director of ALFC or any ALFC Subsidiary participates or to which any such
employee, consultant or director is a party or is otherwise entitled to receive
benefits (the "Compensation and Benefit Plans"). Except as set forth in ALFC
Disclosure Schedule 4.13.1, neither ALFC nor any of its Subsidiaries has any
commitment to create any additional Compensation and Benefit Plan or to
materially modify, change or renew any existing Compensation and Benefit Plan
(any modification or change that increases the cost of such plans would be
deemed material), except as required to maintain the qualified status thereof.
ALFC has made available to FFC true and correct copies of the Compensation and
Benefit Plans and amendments thereto.
4.13.2 Except as disclosed in ALFC Disclosure Schedule 4.13.2, each
Compensation and Benefit Plan has been operated and administered in all material
respects in accordance with its terms and with applicable law, including, but
not limited to, ERISA, the Code, the Securities Act, the Exchange Act, the Age
Discrimination in Employment Act, COBRA, the Health Insurance Portability and
Accountability Act and any regulations or rules promulgated thereunder, and all
material filings, disclosures and notices required by ERISA, the Code, the
Securities Act, the Exchange Act, the Age Discrimination in Employment Act and
any other applicable law have been timely made or any interest, fines, penalties
or other impositions for late filings have been paid in full. Each Compensation
and Benefit Plan which is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA (a "Pension Plan") and which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS, and ALFC is not aware of any circumstances
which are reasonably likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the Knowledge of ALFC,
threatened action, suit or claim relating to any of the Compensation and Benefit
Plans (other than routine claims for benefits). Neither ALFC nor any ALFC
Subsidiary has engaged in a transaction, or omitted to take any action, with
respect to any Compensation and Benefit Plan that would reasonably be expected
to subject ALFC or any ALFC Subsidiary to an unpaid tax or penalty imposed by
either Section 4975 of the Code or Section 502 of ERISA.
4.13.3 Except as set forth in ALFC Disclosure Schedule 4.13.3, no
liability, other than PBGC premiums arising in the ordinary course of business,
has been or is expected by ALFC or any ALFC Subsidiary to be incurred with
respect to any ALFC Compensation and Benefit Plan which is a defined benefit
plan subject to Title IV of ERISA ("ALFC Defined Benefit Plan"), or with respect
to any "single-employer plan" (as defined in Section 4001(a) of ERISA) currently
or formerly maintained by ALFC or any entity which is considered one employer
with ALFC under Section 4001(b)(1) of ERISA or Section 414 of the Code (an
"ERISA Affiliate") (such plan hereinafter referred to as an "ERISA Affiliate
Plan"). Except as set forth in ALFC Disclosure Schedule 4.13.3, no ALFC Defined
Benefit Plan had an "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, as of the last day of the end of the most
recent plan year ending prior to the date hereof. Except as set forth in ALFC
Disclosure Schedule 4.13.3, the fair market value of the assets of each ALFC
Defined Benefit Plan exceeds the present value of the "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA) under such ALFC Defined Benefit Plan as
of the end of the most recent plan year with respect to the respective ALFC
Defined Benefit Plan ending prior to the date hereof, calculated on the basis of
the actuarial assumptions used in the most recent actuarial valuation for such
ALFC Defined Benefit Plan as of the date hereof; and no notice of a "reportable
event" (as defined in Section 4043 of ERISA) for which the 30-day reporting
requirement has not been waived has been required to be filed for any ALFC
Defined Benefit Plan within the 12-month period ending on the date hereof.
Except as set forth in ALFC Disclosure Schedule 4.13.3, neither ALFC nor any of
its Subsidiaries has provided, or is required to provide, security to any ALFC
Defined Benefit Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code or has taken any action, or omitted
to take any action, that has resulted, or would reasonably be expected to result
in the imposition of a lien under Section 412(n) of the Code or pursuant to
ERISA. To the Knowledge of ALFC, and except as set forth in ALFC Disclosure
24
Schedule 4.13.3, there is no pending investigation or enforcement action by any
Bank Regulator with respect to any Compensation and Benefit Plan or any ERISA
Affiliate Plan.
4.13.4 The Seller and the ERISA Affiliates have never had an obligation to
contribute to a "multi-employer plan" as such term is defined in section 3(37)
of ERISA or had any direct or indirect liability or potential liability with
respect to such a plan.
4.13.5 Except as set forth in ALFC Disclosure Schedule 4.13.5, all material
contributions required to be made under the terms of any Compensation and
Benefit Plan or ERISA Affiliate Plan or any employee benefit arrangements to
which ALFC or any ALFC Subsidiary is a party or a sponsor have been timely made,
and all anticipated contributions and funding obligations are accrued on ALFC's
consolidated financial statements to the extent required by GAAP. ALFC and the
ALFC Subsidiaries have expensed and accrued as a liability the present value of
future benefits under each applicable Compensation and Benefit Plan for
financial reporting purposes as required by GAAP.
4.13.6 Except as set forth in ALFC Disclosure Schedule 4.13.6, neither ALFC
nor any ALFC Subsidiary has any obligations to provide retiree health, life
insurance, disability insurance, or other retiree death benefits under any
Compensation and Benefit Plan, other than benefits mandated by Section 4980B of
the Code, and there has been no communication to employees by ALFC or any ALFC
Subsidiary that would reasonably be expected to promise or guarantee such
benefits.
4.13.7 Except as set forth in ALFC Disclosure Schedule 4.13.7, with respect
to each Compensation and Benefit Plan, if applicable, ALFC has provided or made
available to FFC copies of the: (A) trust instruments and insurance contracts;
(B) two most recent Forms 5500 filed with the IRS; (C) two most recent actuarial
report and financial statement; (D) most recent summary plan description; (E)
most recent determination letter issued by the IRS; and (F) any Form 5310 or
Form 5330 filed with the IRS within the last two years.
4.13.8 Except as disclosed in ALFC Disclosure Schedule 4.13.8, the
consummation of the Merger will not, directly or indirectly (including, without
limitation, as a result of any termination of employment or service at any time
prior to or following the Effective Time) (A) entitle any employee, consultant
or director to any payment or benefit (including severance pay, change in
control benefit, or similar compensation) or any increase in compensation, (B)
result in the vesting or acceleration of any benefits under any Compensation and
Benefit Plan or (C) result in any material increase in benefits payable under
any Compensation and Benefit Plan. The consummation of the Merger and/or the
Bank Merger will not, directly or indirectly (including without limitation, as a
result of any termination of employment or service at any time prior to or
following the Effective Time), entitle any current or former employee, director
or independent contractor of ALFC or any ALFC Subsidiary to any actual or deemed
payment (or benefit) which could constitute an "excess parachute payment" (as
such term is defined in Section 280G of the Code). ALFC Disclosure Schedule
4.13.8 includes a schedule of all termination benefits and related payments that
would be payable to the individuals identified thereon, under any and all
employment agreements, special termination agreements, change in control
agreements, supplemental executive retirement plans, deferred bonus plans,
deferred compensation plans, salary continuation plans, or any material
compensation arrangement, or other pension benefit or welfare benefit plan
maintained by ALFC or any ALFC Subsidiary for the benefit of officers, employee
or directors of ALFC or any ALFC Subsidiary, assuming their employment or
service is terminated as of March 31, 2006 and the Closing Date occurs on such
date and based on the other assumptions specified in such schedule. No other
individuals are entitled to benefits under any such plans.
4.13.9 Except as disclosed in ALFC Disclosure Schedule 4.13.9, neither ALFC
nor any ALFC Subsidiary maintains any compensation plans, programs or
arrangements under which (i) payment is reasonably likely to become
25
non-deductible, in whole or in part, for tax reporting purposes as a result of
the limitations under Section 162(m) of the Code and the regulations issued
thereunder, or (ii) any payment is reasonably likely to become taxable under
section 409A of the Code.
4.13.10 Except as disclosed in ALFC Disclosure Schedule 4.13.10, there are
no stock option, stock appreciation or similar rights, earned dividends or
dividend equivalents, or shares of restricted stock, outstanding under any of
the Compensation and Benefit Plans or otherwise as of the date hereof and none
will be granted, awarded, or credited after the date hereof.
4.14 Brokers, Finders and Financial Advisors.
Neither ALFC nor any ALFC Subsidiary, nor any of their respective officers,
directors, employees or agents, has employed any broker, finder or financial
advisor in connection with the transactions contemplated by this Agreement, or
incurred any liability or commitment for any fees or commissions to any such
person in connection with the transactions contemplated by this Agreement except
for the retention of Sandler X'Xxxxx & Partners, L.P. ("Sandler X'Xxxxx") by
ALFC and the fee payable pursuant thereto.
4.15 Environmental Matters.
4.15.1 Except as may be set forth in ALFC Disclosure Schedule 4.15 and any
Phase I Environmental Report identified therein, with respect to ALFC and each
ALFC Subsidiary:
(A) Each of ALFC and the ALFC Subsidiaries, the Participation
Facilities, and, to ALFC's Knowledge, the Loan Properties are, and have
been, in substantial compliance with, and are not liable under, any
Environmental Laws;
(B) ALFC has received no written notice that there is any suit, claim,
action, demand, executive or administrative order, directive, investigation
or proceeding pending and, to ALFC's Knowledge, no such action is
threatened, before any court, governmental agency or other forum against it
or any of the ALFC Subsidiaries or any Participation Facility (x) for
alleged noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (y) relating to the presence of or release
into the environment of any Materials of Environmental Concern (as defined
herein), whether or not occurring at or on a site owned, leased or operated
by it or any of the ALFC Subsidiaries or any Participation Facility;
(C) ALFC has received no written notice that there is any suit, claim,
action, demand, executive or administrative order, directive, investigation
or proceeding pending and, to ALFC's Knowledge no such action is
threatened, before any court, governmental agency or other forum relating
to or against any Loan Property (or ALFC or any of the ALFC Subsidiaries in
respect of such Loan Property) (x) relating to alleged noncompliance
(including by any predecessor) with, or liability under, any Environmental
Law or (y) relating to the presence of or release into the environment of
any Materials of Environmental Concern, whether or not occurring at or on a
site owned, leased or operated by a Loan Property;
(D) To ALFC's Knowledge, the properties currently owned or operated by
ALFC or any ALFC Subsidiary (including, without limitation, soil,
groundwater or surface water on, or under the properties, and buildings
thereon) are not contaminated with and do not otherwise contain any
Materials of Environmental Concern other than as permitted under applicable
Environmental Law;
26
(E) Neither ALFC nor any ALFC Subsidiary has received any written
notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law;
(F) To ALFC's Knowledge, there are no underground storage tanks on, in
or under any properties owned or operated by ALFC or any of the ALFC
Subsidiaries or any Participation Facility, and to ALFC's Knowledge, no
underground storage tanks have been closed or removed from any properties
owned or operated by ALFC or any of the ALFC Subsidiaries or any
Participation Facility; and
(G) To ALFC's Knowledge, during the period of (s) ALFC's or any of the
ALFC Subsidiaries' ownership or operation of any of their respective
current properties or (t) ALFC's or any of the ALFC Subsidiaries'
participation in the management of any Participation Facility, there has
been no contamination by or release of Materials of Environmental Concern
in, on, under or affecting such properties that could reasonably be
expected to result in material liability under the Environmental Laws. To
ALFC's Knowledge, prior to the period of (x) ALFC's or any of the ALFC
Subsidiaries' ownership or operation of any of their respective current
properties or (y) ALFC's or any of the ALFC Subsidiaries' participation in
the management of any Participation Facility, there was no contamination by
or release of Materials of Environmental Concern in, on, under or affecting
such properties that could reasonably be expected to result in material
liability under the Environmental Laws.
4.15.2 "Loan Property" means any property in which the applicable party (or
a Subsidiary of it) holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only with respect
to such property.
4.15.3 "Participation Facility" means any facility in which the applicable
party (or a Subsidiary of it) participates in the management (including all
property held as trustee or in any other fiduciary capacity) and, where required
by the context, includes the owner or operator of such property, but only with
respect to such property.
4.16 Loan Portfolio.
4.16.1 The allowance for loan losses reflected in the notes to ALFC's
audited consolidated statement of financial condition at March 31, 2005 was, and
the allowance for loan losses shown in the notes to the unaudited consolidated
financial statements in ALFC's Securities Documents for periods ending after
March 31, 2005 were, or will be, adequate, as of the dates thereof, under GAAP.
4.16.2 ALFC Disclosure Schedule 4.16.2 sets forth a listing, as of the most
recently available date, by account, of: (A) each borrower, customer or other
party which has notified Atlantic Liberty Savings, F.A. or any other ALFC
Subsidiary during the past twelve months of, or has asserted against Atlantic
Liberty Savings, F.A. or any other ALFC Subsidiary, in each case in writing, any
"lender liability" or similar claim, and, to the knowledge of Atlantic Liberty
Savings, F.A., each borrower, customer or other party which has given Atlantic
Liberty Savings, F.A. or any other ALFC Subsidiary any oral notification of, or
orally asserted to or against Atlantic Liberty Savings, F.A. or any other ALFC
Subsidiary, any such claim; and (B) all loans, (1) that are contractually past
due 90 days or more in the payment of principal and/or interest, (2) that are on
non-accrual status, (3) that as of the date of this Agreement are classified as
"Other Loans Specially Mentioned", "Special Mention", "Substandard", "Doubtful",
"Loss", "Classified", "Criticized", "Watch list" or words of similar import,
together with the principal amount of and accrued and unpaid interest on each
such Loan and the identity of the obligor thereunder, (4) where a reasonable
doubt exists as to the timely future collectability of principal and/or
27
interest, whether or not interest is still accruing or the loans are less than
90 days past due, (5) where the interest rate terms have been reduced and/or the
maturity dates have been extended subsequent to the agreement under which the
loan was originally created due to concerns regarding the borrower's ability to
pay in accordance with such initial terms, or (6) where a specific reserve
allocation exists in connection therewith; and (C) all other assets classified
by Atlantic Liberty Savings, F.A. or any other ALFC Subsidiary as real estate
acquired through foreclosure or in lieu of foreclosure, including in-substance
foreclosures, and all other assets currently held that were acquired through
foreclosure or in lieu of foreclosure. Disclosure Schedule 4.16.2 may exclude
any individual loan with a principal outstanding balance of less than $100,000,
provided that Disclosure Schedule 4.16.2 includes, for each category described,
the aggregate amount of individual loans with a principal outstanding balance of
less than $100,000 that have been excluded.
4.16.3 All loans receivable (including discounts) and accrued interest
entered on the books of ALFC and the ALFC Subsidiaries arose out of bona fide
arm's-length transactions, were made for good and valuable consideration in the
ordinary course of ALFC's or the appropriate ALFC Subsidiary's respective
business, and the notes or other evidences of indebtedness with respect to such
loans (including discounts) are true and genuine and are what they purport to
be, except as set forth in ALFC Disclosure Schedule 4.16.3. To the Knowledge of
ALFC, the loans, discounts and the accrued interest reflected on the books of
ALFC and the ALFC Subsidiaries are subject to no defenses, set-offs or
counterclaims (including, without limitation, those afforded by usury or
truth-in-lending laws), except as may be provided by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or by general principles of
equity. Except as set forth in ALFC Disclosure Schedule 4.16.3, all such loans
are owned by ALFC or the appropriate ALFC Subsidiary free and clear of any
liens.
4.16.4 The notes and other evidences of indebtedness evidencing the loans
described above, and all pledges, mortgages, deeds of trust and other collateral
documents or security instruments relating thereto are, in all material
respects, valid, true and genuine, and what they purport to be.
4.17 Securities Documents.
ALFC has made available to FFC copies of its (i) annual reports on Form
10-KSB for the years ended March 31, 2005, 2004 and 2003, (ii) quarterly reports
on Form 10-QSB for the quarters ended June 30 and September 30, 2005, and (iii)
proxy materials used or for use in connection with its meetings of stockholders
held in 2005, 2004 and 2003. Such reports and proxy materials complied, at the
time filed with the SEC, in all material respects, with the Securities Laws.
4.18 Related Party Transactions.
Except as described in ALFC's Proxy Statement distributed in connection
with the annual meeting of stockholders held in August 2005 (which has
previously been provided to FFC), or as set forth in ALFC Disclosure Schedule
4.18, neither ALFC nor any ALFC Subsidiary is a party to any transaction
(including any loan or other credit accommodation) with any Affiliate of ALFC or
any ALFC Subsidiary. Except as described in ALFC's Proxy Statement, all such
transactions (a) were made in the ordinary course of business, (b) were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other Persons, and (c)
did not involve more than the normal risk of collectability or present other
unfavorable features. No loan or credit accommodation to any Affiliate of ALFC
or any ALFC Subsidiary is presently in default or, during the three-year period
prior to the date of this Agreement, has been in default or has been
restructured, modified or extended except for rate modifications pursuant to
Atlantic Liberty Savings, F.A.'s loan modification policy that is applicable to
all Persons. Neither ALFC nor any ALFC Subsidiary has been notified that
principal and interest with respect to any such loan or other credit
accommodation will not be paid when due or that the loan grade classification
accorded such loan or credit accommodation by ALFC is inappropriate.
28
4.19 Deposits.
None of the deposits of any ALFC Subsidiary is a "brokered deposit" as
defined in 12 C.F.R. Section 337.6(a)(2).
4.20 Antitakeover Provisions Inapplicable; Required Vote.
The transactions contemplated by this Agreement are not subject to the
requirements of any "moratorium," "control share," "fair price," "affiliate
transactions," "business combination" or other antitakeover laws and regulations
of any state, including the provisions of Section 203 of the DGCL applicable to
ALFC or any ALFC Subsidiary. The affirmative vote of a majority of the issued
and outstanding shares of ALFC Common Stock is required to approve this
Agreement and the Merger under ALFC's certificate of incorporation (and no
greater voting requirement is applicable by reason of Article FOURTH of the
Certificate of Incorporation) and the DGCL.
4.21 Registration Obligations.
Neither ALFC nor any ALFC Subsidiary is under any obligation, contingent or
otherwise, which will survive the Effective Time by reason of any agreement to
register any transaction involving any of its securities under the Securities
Act.
4.22 Risk Management Instruments.
All material interest rate swaps, caps, floors, option agreements, futures
and forward contracts and other similar risk management arrangements, whether
entered into for ALFC's own account, or for the account of one or more of ALFC's
Subsidiaries or their customers (all of which are set forth in ALFC Disclosure
Schedule 4.22), were in all material respects entered into in compliance with
all applicable laws, rules, regulations and regulatory policies, and to the
Knowledge of ALFC and each ALFC Subsidiary, with counterparties believed to be
financially responsible at the time; and to ALFC's and each ALFC Subsidiary's
Knowledge each of them constitutes the valid and legally binding obligation of
ALFC or such ALFC Subsidiary, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and is in full force and effect. Neither ALFC nor any ALFC
Subsidiary, nor, to the Knowledge of ALFC, any other party thereto, is in breach
of any of its obligations under any such agreement or arrangement, in any
material respect.
4.23 Fairness Opinion.
ALFC has received an opinion from Sandler X'Xxxxx to the effect that,
subject to the terms, conditions and qualifications set forth therein, as of the
date hereof, the Merger Consideration to be received by the stockholders of ALFC
pursuant to this Agreement is fair to such stockholders from a financial point
of view. Such opinion has not been amended or rescinded as of the date of this
Agreement.
29
4.24 Intellectual Property.
ALFC and each Significant Subsidiary of ALFC owns or, to ALFC's Knowledge,
possesses valid and binding licenses and other rights to use, subject to
expiration in accordance with their terms, all patents, copyrights, trade
secrets, trade names, servicemarks and trademarks used in their business
(collectively, the "Intellectual Property"), each without payment, and neither
ALFC nor any Significant Subsidiary of ALFC has received any notice of conflict
with respect thereto that asserts the rights of others. ALFC and each
Significant Subsidiary of ALFC have performed all the obligations required to be
performed, and are not in default in any respect, under any contract, agreement,
arrangement or commitment relating to any of the foregoing. The consummation of
the Merger will not result in the loss or impairment of the right of ALFC or any
ALFC Subsidiary to own or use any of the Intellectual Property, and FFC will
have substantially the same rights to own or use the Intellectual Property
following the consummation of the Merger as ALFC and the ALFC Subsidiaries had
prior to the consummation of the Merger.
4.25 ALFC Information.
The information relating to ALFC and the ALFC Subsidiaries to be provided
by ALFC or its representatives in writing for inclusion the Proxy
Statement-Prospectus, the Merger Registration Statement, any filing pursuant to
Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under the Exchange
Act, or in any other document filed with any other Regulatory Authority in
connection herewith, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF FFC
FFC represents and warrants to ALFC that the statements contained in this
Article V are correct as of the date of this Agreement and will be correct as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article V), except as
set forth in the FFC Disclosure Schedule delivered by FFC to ALFC on the date
hereof. FFC has made a good faith effort to ensure that the disclosure on each
schedule of the FFC Disclosure Schedule corresponds to the section referenced
herein. However, for purposes of the FFC Disclosure Schedule, any item disclosed
on any schedule therein is deemed to be fully disclosed with respect to all
schedules under which such item may be relevant as and to the extent that it is
reasonably clear on the face of such schedule that such item applies to such
other schedule. References to the Knowledge of FFC shall include the Knowledge
of Flushing Savings Bank, FSB.
5.1 Standard.
No representation or warranty of FFC contained in this Article V shall be
deemed untrue or incorrect, and FFC shall not be deemed to have breached a
representation or warranty, as a consequence of the existence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent with
any paragraph of Article V, has had or is reasonably expected to have a Material
Adverse Effect; provided, however, that the foregoing standard shall not apply
to representations and warranties contained in Sections 5.2, 5.3 and 5.4, which
shall be deemed untrue, incorrect and breached if they are not true and correct
in all material respects.
30
5.2 Organization.
5.2.1 FFC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is duly registered as a
savings and loan holding company under the HOLA. FFC has full corporate power
and authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification.
5.2.2 Flushing Savings Bank, FSB is a federally chartered stock savings
bank organized, validly existing and in good standing under the laws of the
United States. The deposits of Flushing Savings Bank, FSB are insured by the
FDIC to the fullest extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid when due. Flushing
Savings Bank, FSB is a member in good standing of the FHLB and owns the
requisite amount of stock therein.
5.2.3 FFC Disclosure Schedule 5.2.3 sets forth each FFC Subsidiary. Each
FFC Subsidiary (other than Flushing Savings Bank, FSB) is a corporation or
limited liability company duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization.
5.2.4 The respective minute books of FFC and each FFC Subsidiary accurately
records, in all material respects, all material corporate actions of their
respective stockholders and boards of directors (including committees).
5.2.5 Prior to the date of this Agreement, FFC has made available to ALFC
true and correct copies of the certificate of incorporation or charter and
bylaws of FFC and Flushing Savings Bank, FSB.
5.3 Capitalization.
5.3.1 The authorized capital stock of FFC consists of 40,000,000 shares of
FFC Common Stock, of which 19,465,844 shares are outstanding, validly issued,
fully paid and nonassessable and free of preemptive rights, and 5,000,000 shares
of preferred stock, $0.01 par value ("FFC Preferred Stock"), none of which are
outstanding. There are 1,050 shares of FFC Common Stock held by FFC as treasury
stock. Neither FFC nor any FFC Subsidiary has or is bound by any Rights of any
character relating to the purchase, sale or issuance or voting of, or right to
receive dividends or other distributions on any shares of FFC Common Stock, or
any other security of FFC or any securities representing the right to vote,
purchase or otherwise receive any shares of FFC Common Stock or any other
security of FFC, other than (i) shares issuable under the FFC Stock Benefit
Plans, (ii) the FFC Stock Purchase Rights, (iii) capital securities issued by
Flushing Financial Capital Trust I, (iv) debentures issued by FFC to Flushing
Financial Capital Trust I, and (v) the guarantee issued by FFC to the holders of
the capital securities issued by Flushing Financial Capital Trust I.
5.3.2 FFC owns all of the capital stock of Flushing Savings Bank, FSB free
and clear of any lien or encumbrance. Either FFC or Flushing Savings Bank, FSB
owns all of the outstanding shares of capital stock of each FFC Subsidiary free
and clear of all liens, security interests, pledges, charges, encumbrances,
agreements and restrictions of any kind or nature, except that, in the case of
Flushing Financial Capital Trust I and Flushing Preferred Funding Corporation,
FFC or an FFC Subsidiary owns 100% of the common securities and less than 100%
of the preferred securities.
31
5.4 Authority; No Violation.
5.4.1 FFC has full corporate power and authority to execute and deliver
this Agreement and, subject to receipt of the required Regulatory Approvals, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by FFC and the completion by FFC of the transactions contemplated
hereby, up to and including the Merger, have been duly and validly approved by
the Board of Directors of FFC, and no other corporate proceedings on the part of
FFC are necessary to complete the transactions contemplated hereby, up to and
including the Merger. This Agreement has been duly and validly executed and
delivered by FFC, and subject to the receipt of the Regulatory Approvals
described in Section 8.3 hereof, constitutes the valid and binding obligation of
FFC and Flushing Savings Bank, FSB, enforceable against FFC in accordance with
its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally, and subject, as to enforceability, to
general principles of equity.
5.4.2 (A) The execution and delivery of this Agreement by FFC, (B) subject
to receipt of the Regulatory Approvals, and compliance by ALFC and FFC with any
conditions contained therein, and subject to the receipt of the approval of the
stockholders of ALFC, the consummation of the transactions contemplated hereby,
and (C) compliance by FFC with any of the terms or provisions hereof will not
(i) conflict with or result in a breach of any provision of the certificate of
incorporation or bylaws of FFC or any FFC Subsidiary or the charter and bylaws
of Flushing Savings Bank, FSB; (ii) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to FFC or any
FFC Subsidiary or any of their respective properties or assets; or (iii)
violate, conflict with, result in a breach of any provisions of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default), under, result in the termination of, accelerate the
performance required by, or result in a right of termination or acceleration or
the creation of any lien, security interest, charge or other encumbrance upon
any of the properties or assets of FFC, Flushing Savings Bank, FSB or any FFC
Subsidiary under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
investment or obligation to which any of them is a party, or by which they or
any of their respective properties or assets may be bound or affected, except
for such violations, conflicts, breaches or defaults under clause (ii) or (iii)
hereof which, either individually or in the aggregate, will not have a Material
Adverse Effect on FFC and the FFC Subsidiaries taken as a whole.
5.5 Consents.
Except for the regulatory approvals referred to in Section 8.3 hereof and
compliance with any conditions contained therein, and the approval of this
Agreement by the requisite vote of the stockholders of ALFC, no consents,
waivers or approvals of, or filings or registrations with, any Governmental
Entity or Bank Regulator are necessary, and, to the Knowledge of FFC, no
consents, waivers or approvals of, or filings or registrations with, any other
third parties are necessary, in connection with (a) the execution and delivery
of this Agreement by FFC and the completion by FFC of the Merger or (b) the
execution and delivery of the Plan of Bank Merger by Flushing Savings Bank, FSB
and the completion by Flushing Savings Bank, FSB of the Bank Merger. FFC has no
reason to believe that (i) any Regulatory Approvals or other required consents
or approvals will not be received, or that (ii) any public body or authority,
the consent or approval of which is not required or to which a filing is not
required, will object to the completion of the transactions contemplated by this
Agreement.
5.6 Financial Statements.
5.6.1 FFC has previously made available to ALFC the FFC Financial
Statements. The FFC Financial Statements have been prepared in accordance with
GAAP, and (including the related notes where applicable) fairly present in each
32
case in all material respects (subject in the case of the unaudited interim
statements to normal year-end adjustments) the consolidated financial position,
results of operations and cash flows of FFC and the FFC Subsidiaries on a
consolidated basis as of and for the respective periods ending on the dates
thereof, in accordance with GAAP during the periods involved, except as
indicated in the notes thereto, or in the case of unaudited statements, as
permitted by Form 10-Q.
5.6.2 At the date of each balance sheet included in the FFC Financial
Statements, FFC did not have any liabilities, obligations or loss contingencies
of any nature (whether absolute, accrued, contingent or otherwise) of a type
required to be reflected in such FFC Financial Statements or in the footnotes
thereto which are not fully reflected or reserved against therein or fully
disclosed in a footnote thereto, except for liabilities, obligations and loss
contingencies which are not material individually or in the aggregate or which
are incurred in the ordinary course of business, consistent with past practice,
and except for liabilities, obligations and loss contingencies which are within
the subject matter of a specific representation and warranty herein and subject,
in the case of any unaudited statements, to normal, recurring audit adjustments
and the absence of footnotes.
5.7 No Material Adverse Effect.
Except as disclosed in FFC's Securities Documents filed on or prior to the
date hereof, FFC and the FFC Subsidiaries, taken as a whole, have not suffered
any Material Adverse Effect since December 31, 2004 and no event has occurred or
circumstance arisen since that date which, in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on FFC and the FFC
Subsidiaries, taken as a whole.
5.8 Legal Proceedings.
Except as disclosed in FFC Disclosure Schedule 5.8, neither FFC nor any FFC
Subsidiary is a party to any, and there are no pending or, to the Knowledge of
FFC, threatened legal, administrative, arbitration or other proceedings, claims
(whether asserted or unasserted), actions or governmental investigations or
inquiries of any nature (i) against FFC or any FFC Subsidiary, (ii) to which FFC
or any FFC Subsidiary's assets are or may be subject, (iii) challenging the
validity or propriety of any of the transactions contemplated by this Agreement,
or (iv) which could adversely affect the ability of FFC to perform under this
Agreement, except for any proceeding, claim, action, investigation or inquiry
referred to in clauses (i) and (ii) which, if adversely determined, individually
or in the aggregate, could not be reasonably expected to have a Material Adverse
Effect.
5.9 Compliance With Applicable Law.
5.9.1 To the Knowledge of FFC, each of FFC and each FFC Subsidiary is in
compliance in all material respects with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable to it, its properties, assets and deposits, its business, and
its conduct of business and its relationship with its employees, including,
without limitation, the Xxxxxxxx-Xxxxx Act of 2002, the USA Patriot Act, the
Bank Secrecy Act, the Equal Credit Opportunity Act, the Fair Housing Act, the
CRA, the Home Mortgage Disclosure Act, and all other applicable fair lending
laws and other laws relating to discriminatory business practices, and neither
FFC nor any FFC Subsidiary has received any written notice to the contrary.
5.9.2 Each of FFC and each FFC Subsidiary has all material permits,
licenses, authorizations, orders and approvals of, and has made all filings,
applications and registrations with, all Bank Regulators that are required in
order to permit it to own or lease its properties and to conduct its business as
presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the Knowledge of FFC,
33
no suspension or cancellation of any such permit, license, certificate, order or
approval is threatened or will result from the consummation of the transactions
contemplated by this Agreement, subject to obtaining the approvals set forth in
Section 8.3.
5.9.3 For the period beginning January 1, 2003, neither FFC nor any FFC
Subsidiary has received any written notification or, to the Knowledge of FFC,
any other communication from any Bank Regulator (i) asserting that FFC or any
FFC Subsidiary is not in material compliance with any of the statutes,
regulations or ordinances which such Bank Regulator enforces; (ii) threatening
to revoke any license, franchise, permit or governmental authorization which is
material to FFC or any FFC Subsidiary; (iii) requiring or threatening to require
FFC or any FFC Subsidiary, or indicating that FFC or any FFC Subsidiary may be
required, to enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement with any federal or state governmental
agency or authority which is charged with the supervision or regulation of banks
or engages in the insurance of bank deposits restricting or limiting, or
purporting to restrict or limit, in any material respect the operations of FFC
or any FFC Subsidiary, including without limitation any restriction on the
payment of dividends; or (iv) directing, restricting or limiting, or purporting
to direct, restrict or limit, in any manner the operations of FFC or any FFC
Subsidiary, including without limitation any restriction on the payment of
dividends (any such notice, communication, memorandum, agreement or order
described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither FFC nor any FFC Subsidiary has consented to or entered into
any currently effective Regulatory Agreement. The most recent regulatory rating
given to Flushing Savings Bank, FSB as to compliance with the CRA is
satisfactory or better.
5.10 Securities Documents.
FFC has made available to ALFC copies of its (i) annual report on Form 10-K
for the year ended December 31, 2004, (ii) quarterly reports on Form 10-Q for
the quarters ended March 31, June 30, and September 30, 2005 and (iii) proxy
materials used or for use in connection with its meeting of stockholders held in
2005. Such reports and such proxy materials complied, at the time filed with the
SEC, in all material respects, with the Securities Laws.
5.11 Brokers, Finders and Financial Advisors.
Neither FFC nor any FFC Subsidiary, nor any of their respective officers,
directors, employees or agents, has employed any broker, finder or financial
advisor in connection with the transactions contemplated by this Agreement, or
incurred any liability or commitment for any fees or commissions to any such
person in connection with the transactions contemplated by this Agreement,
except for the retention of Xxxxx, Xxxxxxxx & Xxxxx, Inc. by FFC and the fee
payable pursuant thereto.
5.12 FFC Information.
The information relating to FFC and the FFC Subsidiaries to be provided by
FFC or its representatives in writing for inclusion the Proxy
Statement-Prospectus, the Merger Registration Statement, any filing pursuant to
Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under the Exchange
Act, or in any other document filed with any other Regulatory Authority in
connection herewith, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading.
34
5.13 FFC Common Stock.
The shares of FFC Common Stock to be issued pursuant to this Agreement,
when issued in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and non-assessable and subject to no
preemptive rights.
5.14 Deposits.
Except as set forth on FFC Disclosure Schedule 5.14, none of the deposits
of any FFC Subsidiary is a "brokered deposit" as defined in 12 C.F.R. Section
337.6(a)(2).
5.15 Risk Management Instruments.
All material interest rate swaps, caps, floors, option agreements, futures
and forward contracts and other similar risk management arrangements, whether
entered into for FFC's own account, or for the account of one or more of FFC's
Subsidiaries or their customers, were in all material respects entered into in
compliance with all applicable laws, rules, regulations and regulatory policies,
and to the Knowledge of FFC and each FFC Subsidiary, with counterparties
believed to be financially responsible at the time; and to FFC's and each FFC
Subsidiary's Knowledge each of them constitutes the valid and legally binding
obligation of FFC or such FFC Subsidiary, enforceable in accordance with its
terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditors' rights or by general
equity principles), and is in full force and effect. Neither FFC nor any FFC
Subsidiary, nor, to the Knowledge of FFC, any other party thereto, is in breach
of any of its obligations under any such agreement or arrangement, in any
material respect.
5.16 Material Contracts.
Subject to any consents that may be required as a result of the
transactions contemplated by this Agreement, to its Knowledge, neither FFC nor
any FFC Subsidiary is in default in any material respect under any material
contract, agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party, by which its assets, business, or operations
may be bound or affected, or under which it or its assets, business, or
operations receive benefits, 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.
5.17 Employee Benefit Plans.
Each Compensation and Benefit Plan has been operated and administered in
all material respects in accordance with its terms and with applicable law,
including, but not limited to, ERISA, the Code, the Securities Act, the Exchange
Act, the Age Discrimination in Employment Act, COBRA, the Health Insurance
Portability and Accountability Act and any regulations or rules promulgated
thereunder, and all material filings, disclosures and notices required by ERISA,
the Code, the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act and any other applicable law have been timely made or any
interest, fines, penalties or other impositions for late filings have been paid
in full. Each Compensation and Benefit Plan which is a Pension Plan and which is
35
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS, and FFC is not aware of any
circumstances which are reasonably likely to result in revocation of any such
favorable determination letter. There is no material pending or, to the
Knowledge of FFC, threatened action, suit or claim relating to any of the
Compensation and Benefit Plans (other than routine claims for benefits). Neither
FFC nor any FFC Subsidiary has engaged in a transaction, or omitted to take any
action, with respect to any Compensation and Benefit Plan that would reasonably
be expected to subject FFC or any FFC Subsidiary to an unpaid tax or penalty
imposed by either Section 4975 of the Code or Section 502 of ERISA.
5.18 Environmental Matters.
5.18.1 To the Knowledge of FFC, neither the conduct nor the operation of
their business nor any condition of any property currently or previously owned
or operated by any of them (including, without limitation, in a fiduciary or
agency capacity), or on which any of them holds a lien, results or resulted in a
violation of any Environmental Laws that is reasonably likely to impose a
material liability (including a material remediation obligation) upon FFC or any
FFC Subsidiary. To the Knowledge of FFC, no condition has existed or event has
occurred with respect to any of them or any such property that, with notice or
the passage of time, or both, is reasonably likely to result in any material
liability to FFC or any FFC Subsidiary by reason of any Environmental Laws.
Neither FFC nor any FFC Subsidiary has received any written notice from any
Person that FFC or any FFC Subsidiary or the operation or condition of any
property ever owned, operated or held as collateral or in a fiduciary capacity
by any of them are currently in violation of or otherwise are alleged to have
financial exposure under any Environmental Laws or relating to Materials of
Environmental Concern (including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any Materials
of Environmental Concern at, on, beneath, or originating from any such property)
for which a material liability is reasonably likely to be imposed upon FFC or
any FFC Subsidiary.
5.18.2 There is no suit, claim, action, demand, executive or administrative
order, directive, investigation or proceeding pending or, to FFC's Knowledge,
threatened, before any court, governmental agency or other forum against FFC or
any FFC Subsidiary (x) for alleged noncompliance (including by any predecessor)
with, or liability under, any Environmental Law or (y) relating to the presence
of or release into the environment of any Materials of Environmental Concern (as
defined herein), whether or not occurring at or on a site owned, leased or
operated by FFC or any FFC Subsidiary.
5.19 Loan Portfolio.
5.19.1 The allowance for loan losses reflected in the notes to FFC's
audited consolidated statement of financial condition at December 31, 2004 was,
and the allowance for loan losses shown in the notes to the unaudited
consolidated financial statements in FFC's Securities Documents for periods
ending after December 31, 2004 were, or will be, adequate, as of the dates
thereof, under GAAP.
5.19.2 All loans receivable (including discounts) and accrued interest
entered on the books of FFC and the FFC Subsidiaries arose out of bona fide
arm's-length transactions, were made for good and valuable consideration in the
ordinary course of FFC's or the appropriate FFC Subsidiary's respective
business, and the notes or other evidences of indebtedness with respect to such
loans (including discounts) are true and genuine and are what they purport to
be. To the Knowledge of FFC, the loans, discounts and the accrued interest
reflected on the books of FFC and the FFC Subsidiaries are subject to no
defenses, set-offs or counterclaims (including, without limitation, those
afforded by usury or truth-in-lending laws), except as may be provided by
36
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
by general principles of equity.
5.19.3 The notes and other evidences of indebtedness evidencing the loans
described above, and all pledges, mortgages, deeds of trust and other collateral
documents or security instruments relating thereto are, in all material
respects, valid, true and genuine, and what they purport to be.
5.20 Taxes.
5.20.1 (i) FFC, each FFC Subsidiary and the FFC Group has filed or caused
to be filed, and with respect to Tax Returns due between the date of this
Agreement and the date the Effective Time occurs, will timely file (including
any applicable extensions) all Tax Returns required to be filed by the Code or
by applicable state, local or foreign Tax laws and all such Tax Returns are, or
in the case of such Tax Returns not yet filed, will be, true, complete and
correct in all material respects, and (ii) all Taxes of FFC, the FFC
Subsidiaries and the FFC Group (whether or not reflected on any such Tax
Returns) attributable to a Pre-Effective Time Tax Period have been, or in the
case of Taxes the due date for payment of which is between the date of this
Agreement and the date the Effective Time occurs, timely paid in full.
5.20.2 The most recent audited financial statements for FFC reflect an
adequate reserve for all Taxes payable by FFC and the FFC Subsidiaries for all
taxable periods and portions thereof through the date of such financial
statements, and, in the case of Taxes owed as of the date hereof, an adequate
reserve is (and until the date the Effective Time occurs will continue to be)
reflected in the accruals for Taxes payable on the Balance Sheet, other than
accruals established to reflect timing differences and accruals reflected only
in the notes thereto.
5.20.3 There are no liens for Taxes with respect to any of the assets or
properties of FFC or any FFC Subsidiary.
5.20.4 Except as disclosed in FFC Disclosure Schedule 5.19.4, no material
Tax Return of FFC, any FFC Subsidiary or the FFC Group is under audit or
examination by any other Taxing Authority, and no notice of such an audit or
examination has been received by FFC or any FFC Subsidiary.
5.20.5 Each deficiency, if any, resulting from any audit or examination
relating to Taxes by any Taxing Authority has been timely paid. No issues
relating to Taxes were raised by the relevant Taxing Authority in any completed
audit or examination that can reasonably be expected to recur in a later taxable
period. The relevant statute of limitations is closed with respect to the
Federal, foreign and material state and local Tax Returns of FFC, each FFC
Subsidiary and the FFC Group for all years through 2001.
5.20.6 None of FFC, any FFC Subsidiary or the FFC Group is a party to or is
bound by any Tax sharing agreement, Tax indemnity obligation or similar
agreement, arrangement or practice with respect to Taxes (including, without
limitation, any advance pricing agreement, closing agreement or other agreement
relating to Taxes with any Taxing Authority), other than as required by the OTS
in connection with Flushing Savings Bank, FSB's mutual to stock conversion.
5.20.7 Neither FFC nor any FFC Subsidiary will be required to include in a
taxable period ending after the date of the Effective Time any taxable income
attributable to income that accrued, but was not recognized, in a Pre-Effective
Time Tax Period (or the portion of a Straddle Period allocable to the
Pre-Effective Time Tax Period) as a result of an adjustment under Section 481 of
the Code, the installment method of accounting, the long-term contract method of
accounting, the cash method of accounting, any comparable provision of state,
local, or foreign Tax law, or for any other reason.
37
5.20.8 There are no outstanding agreements or waivers extending, or having
the effect of extending, the statutory period of limitation applicable to any
Tax Returns required to be filed with respect to FFC or any FFC Subsidiary, and
none of FFC, any FFC Subsidiary or the FFC Group has requested any extension of
time within which to file any Tax Return, which return has not yet been filed.
No power of attorney with respect to any Taxes has been executed or filed with
any Taxing Authority by or on behalf of FFC, any FFC Subsidiary or the FFC
Group.
5.20.9 FFC and each of the FFC Subsidiaries have complied in all respects
with all applicable laws relating to the payment and withholding of Taxes
(including withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402
of the Code or any comparable provision of any state, local or foreign laws) and
have, within the time and in the manner prescribed by applicable law, withheld
from and paid over to the proper Taxing Authorities all amounts required to be
so withheld and paid over under such laws.
5.20.10 Neither FFC nor any FFC Subsidiary has been a party to any
distribution occurring during the last three years in which the parties to such
distribution treated the distribution as one to which Section 355 of the Code
applied.
5.20.11 Neither FFC nor any FFC Subsidiary is a party to any "listed
transaction" as defined in Treasury Regulation Section 1.6011-4(b)(2).
5.20.12 The applicable Tax Returns of FFC, the FFC Subsidiaries and the FFC
Group have disclosed any Tax positions of FFC, the FFC Subsidiaries or the FFC
Group that, if not disclosed, could give rise to penalties under Section 6662 of
the Code.
5.20.13 FFC has not been, at any time during the applicable time period set
forth in Section 897(c)(1) of the Code, a United States real property holding
company within the meaning of Section 897(c)(2) of the Code.
ARTICLE VI
COVENANTS OF ALFC
6.1 Conduct of Business.
6.1.1 Affirmative Covenants. During the period from the date of this
Agreement to the Effective Time, except with the written consent of FFC, which
consent will not be unreasonably withheld, conditioned or delayed, ALFC will,
and it will cause each ALFC Subsidiary to: operate its business only in the
usual, regular and ordinary course of business; use reasonable efforts to
preserve intact its business organization and assets and maintain its rights and
franchises; and voluntarily take no action which would: (i) adversely affect the
ability of the parties to obtain the regulatory approvals referenced in Section
8.3 or materially increase the period of time necessary to obtain such
approvals, or (ii) adversely affect its ability to perform its covenants and
agreements under this Agreement.
6.1.2 Negative Covenants. ALFC agrees that from the date of this Agreement
to the Effective Time, except as otherwise specifically permitted or required by
this Agreement, set forth in ALFC Disclosure Schedule 6.1.2, or consented to by
38
FFC in writing (which consent shall not be unreasonably withheld, conditioned or
delayed), it will not, and it will cause each of the ALFC Subsidiaries not to:
(A) change or waive any provision of its Certificate of Incorporation,
Charter or Bylaws, except in order to amend Section 9 of the Federal Stock
Charter of Atlantic Liberty Savings, F.A. or as required by law;
(B) change the number of authorized or issued shares of its capital stock,
issue any shares of ALFC Common Stock that are held as "treasury shares" as of
the date of this Agreement, or issue or grant any Right or agreement of any
character relating to its authorized or issued capital stock or any securities
convertible into shares of such stock, make any grant or award under the ALFC
Stock Benefit Plan, or split, combine or reclassify any shares of its capital
stock, or declare, set aside or pay any dividend or other distribution in
respect of its capital stock, or redeem or otherwise acquire any shares of its
capital stock, except that (A) ALFC may issue shares of ALFC Common Stock upon
the valid exercise, in accordance with the information set forth in ALFC
Disclosure Schedule 4.3.1, of presently outstanding ALFC Options issued under
the ALFC Stock Benefit Plan, (B) ALFC may continue to pay its regular quarterly
cash dividend of $0.08 per share with payment and record dates consistent with
past practice (provided the declaration of the last quarterly dividend by ALFC
prior to the Effective Time and the payment thereof shall be coordinated with
FFC so that holders of ALFC Common Stock do not receive dividends on both ALFC
Common Stock and FFC Common Stock received in the Merger in respect of such
quarter or fail to receive a dividend on at least one of the ALFC Common Stock
or FFC Common Stock received in the Merger in respect of such quarter), and (C)
any ALFC Subsidiary may pay dividends to its parent company (as permitted under
applicable law or regulations).
(C) enter into, amend in any material respect or terminate any contract or
agreement (including without limitation any settlement agreement with respect to
litigation) involving a payment by ALFC or Atlantic Liberty Savings, F.A. of
more than $25,000, except in the ordinary course of business;
(D) other than as set forth in ALFC Disclosure Schedule 6.1.2(D), make
application for the opening or closing of any, or open or close any, branch or
automated banking facility;
(E) enter into any new line of business or introduce any new products;
(F) grant or agree to pay any bonus, severance or termination to, or enter
into, renew or amend any employment agreement, severance agreement and/or
supplemental executive agreement with, or increase in any manner the
compensation or fringe benefits of, any of its directors, officers or employees,
except (i) as may be required by applicable law or pursuant to commitments
existing on the date hereof and set forth on ALFC Disclosure Schedules 4.9.1 and
4.13.1 or as required pursuant to Section 6.11 of this Agreement, (ii) as to
non-executive employees, merit pay increases, (iii) the payment of bonuses for
the year ending December 31, 2005, to the extent such bonuses have been accrued
in accordance with GAAP through the date hereof and consistent therewith through
December 31, 2005 and provided that such bonuses are consistent, as to amount
and persons covered, with past practice (provided, however, in determining the
amount of such bonuses, any acceleration and payment in 2005 of amounts under
the employment agreements of Messrs. Xxxxxxx and Xxxxxxxxx will not be deducted
from Atlantic Liberty Savings, F.A. income for purposes of calculating the
bonuses due to the executives), (iv) the payment immediately prior to the
Effective Time of bonuses for that portion of 2006 that precedes the Effective
Time and that do not exceed in the case of any recipient the bonus paid to such
recipient for 2005 multiplied by a fraction the numerator of which is the number
of calendar months in 2006 that begin before the Effective Time and the
denominator of which is 12, and (v) Atlantic Liberty Savings, F.A. may hire
39
at-will, non-officer employees to fill vacancies that may from time to time
arise in the ordinary course of business. In addition, ALFC may agree to pay
employees of ALFC or Atlantic Liberty Savings, F.A., who are identified by ALFC
and agreed to by FFC, a retention bonus in an individual amount, and in an
aggregate amount as to all retention bonuses, to be agreed to by the parties;
(G) enter into or, except as may be required by law, materially modify any
pension, retirement, stock option, stock purchase, stock appreciation right,
stock grant, savings, profit sharing, deferred compensation, supplemental
retirement, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or employees; or
make any contributions to any defined contribution or defined benefit plan not
in the ordinary course of business consistent with past practice; provided,
however, that ALFC shall accelerate the vesting of stock options and restricted
stock held by Messrs. Xxxxxxx and Xxxxxxxxx pursuant to the terms of the
Settlement Agreement (as defined in Section 6.11);
(H) merge or consolidate ALFC or any ALFC Subsidiary with any other
corporation; sell or lease all or any substantial portion of the assets or
business of ALFC or any ALFC Subsidiary; make any acquisition of all or any
substantial portion of the business or assets of any other Person other than in
connection with foreclosures, settlements in lieu of foreclosure, troubled loan
or debt restructuring, or the collection of any loan or credit arrangement
between ALFC, or any ALFC Subsidiary, and any other Person; enter into a
purchase and assumption transaction with respect to deposits and liabilities;
permit the revocation or surrender by any ALFC Subsidiary of its certificate of
authority to maintain, or file an application for the relocation of, any
existing branch office, or file an application for a certificate of authority to
establish a new branch office; (I) sell or otherwise dispose of the capital
stock of ALFC or sell or otherwise dispose of any asset of ALFC or of any ALFC
Subsidiary other than in the ordinary course of business consistent with past
practice; except for transactions with the FHLB, subject any asset of ALFC or of
any ALFC Subsidiary to a lien, pledge, security interest or other encumbrance
(other than in connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the ordinary course
of business and transactions in "federal funds" and the satisfaction of legal
requirements in the exercise of trust powers) other than in the ordinary course
of business consistent with past practice; incur any indebtedness for borrowed
money (or guarantee any indebtedness for borrowed money), except in the ordinary
course of business consistent with past practice;
(J) take any action which would result in any of the representations and
warranties of ALFC set forth in this Agreement becoming untrue as of any date
after the date hereof or in any of the conditions set forth in Article IX hereof
not being satisfied, except in each case as may be required by applicable law;
(K) change any method, practice or principle of accounting, except as may
be required from time to time by GAAP (without regard to any optional early
adoption date) or any Bank Regulator responsible for regulating ALFC or Atlantic
Liberty Savings, F.A.;
(L) waive, release, grant or transfer any material rights of value or
modify or change in any material respect any existing material agreement or
indebtedness to which ALFC or any ALFC Subsidiary is a party, other than in the
ordinary course of business, consistent with past practice;
(M) purchase any equity securities, or purchase any security for its
investment portfolio inconsistent with ALFC's or any ALFC Subsidiary's current
investment policy;
40
(N) except for commitments issued prior to the date of this Agreement which
have not yet expired and which have been disclosed on the ALFC Disclosure
Schedule 6.1.2(N), and the renewal of existing lines of credit, make any new
loan or other credit facility commitment (including without limitation lines of
credit and letters of credit) in an amount in excess of $1,000,000 for a
commercial real estate loan or $750,000 for a construction loan or a residential
loan, or in any amount for a commercial business loan.
(O) except as set forth on the ALFC Disclosure Schedule 6.1.2(O), enter
into, renew, extend or modify any other transaction (other than a deposit
transaction) with any Affiliate other than pursuant to ALFC's existing Insider
Loan Policy;
(P) enter into any futures contract, option, interest rate caps, interest
rate floors, interest rate exchange agreement or other agreement, or take any
other action for purposes of hedging the exposure of its interest-earning assets
and interest-bearing liabilities to changes in market rates of interest;
(Q) except for the execution of this Agreement, and actions taken or which
will be taken in accordance with this Agreement and performance thereunder, take
any action that would give rise to a right of payment to any individual under
any employment agreement;
(R) make any change in policies in existence on the date of this Agreement
with regard to: the extension of credit, or the establishment of reserves with
respect to the possible loss thereon or the charge off of losses incurred
thereon; investments; asset/liability management; or other material banking
policies in any material respect except as may be required by changes in
applicable law or regulations or by a Bank Regulator;
(S) except for the execution of this Agreement, and the transactions
contemplated therein, take any action that would give rise to an acceleration of
the right to payment to any individual under any ALFC Compensation and Benefit
Plan;
(T) except as set forth in ALFC Disclosure Schedule 6.1.2(T), make any
capital expenditures in excess of $50,000 individually or $100,000 in the
aggregate, other than pursuant to binding commitments existing on the date
hereof and other than expenditures necessary to maintain existing assets in good
repair;
(U) except as set forth in ALFC Disclosure Schedule 6.1.2(U), purchase or
otherwise acquire, or sell or otherwise dispose of, any assets or incur any
liabilities other than in the ordinary course of business consistent with past
practices and policies;
(V) sell any participation interest in any loan (other than sales of loans
secured by one- to four-family real estate that are consistent with past
practice) unless Flushing Savings Bank, FSB has been given the first opportunity
and a reasonable time to purchase any loan participation being sold;
(W) undertake or, enter into any lease, contract or other commitment for
its account, other than in the normal course of providing credit to customers as
part of its banking business, involving a payment by ALFC or Atlantic Liberty
Savings, F.A. of more than $25,000 annually, or containing any financial
commitment extending beyond 12 months from the date hereof;
41
(X) pay, discharge, settle or compromise any claim, action, litigation,
arbitration or proceeding; other than any such payment, discharge, settlement or
compromise in the ordinary course of business consistent with past practice that
involves solely money damages in the amount not in excess of $25,000
individually or $50,000 in the aggregate, and that does not create precedent for
other pending or potential claims, actions, litigation, arbitration or
proceedings; or
(Y) agree to do any of the foregoing.
6.2 Current Information.
6.2.1 During the period from the date of this Agreement to the Effective
Time, ALFC will cause one or more of its representatives to confer with
representatives of FFC and report the general status of its ongoing operations
at such times as FFC may reasonably request. ALFC will promptly notify FFC of
any material change in the normal course of its business or in the operation of
its properties and, to the extent permitted by applicable law, of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the known
threat of material litigation involving ALFC or any ALFC Subsidiary.
6.2.2 Atlantic Liberty Savings, F.A. and Flushing Savings Bank, FSB shall
meet on a regular basis to discuss and plan for the conversion of Atlantic
Liberty Savings, F.A.'s data processing and related electronic informational
systems to those used by Flushing Savings Bank, FSB, which planning shall
include, but not be limited to, discussion of the possible termination by
Atlantic Liberty Savings, F.A. of third-party service provider arrangements
effective at the Effective Time or at a date thereafter, non-renewal of personal
property leases and software licenses used by Atlantic Liberty Savings, F.A. in
connection with its systems operations, retention of outside consultants and
additional employees to assist with the conversion, and outsourcing, as
appropriate, of proprietary or self-provided system services, it being
understood that Atlantic Liberty Savings, F.A. shall not be obligated to take
any such action prior to the Effective Time and, unless Atlantic Liberty
Savings, F.A. otherwise agrees, no conversion shall take place prior to the
Effective Time. In the event that Atlantic Liberty Savings, F.A. takes, at the
request of Flushing Savings Bank, FSB, any action relative to third parties to
facilitate the conversion that results in the imposition of any termination fees
or charges, Flushing Savings Bank, FSB shall indemnify Atlantic Liberty Savings,
F.A. for any such fees and charges, and the costs of reversing the conversion
process, if for any reason the Merger is not consummated for any reason other
than a breach of this Agreement by ALFC, or a termination of this Agreement
under Section 11.1.8 or 11.1.9.
6.2.3 ALFC shall provide FFC, within 15 business days of the end of each
calendar month, a written list of nonperforming assets (the term "nonperforming
assets," for purposes of this subsection, means (i) loans that are "troubled
debt restructuring" as defined in Statement of Financial Accounting Standards
No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructuring,"
(ii) loans on nonaccrual, (iii) real estate owned, (iv) all loans ninety (90)
days or more past due as of the end of such month and (iv) impaired loans). On a
monthly basis, ALFC shall provide FFC with a schedule of all loan approvals,
which schedule shall indicate the loan amount, loan type and other material
features of the loan.
6.2.4 ALFC shall promptly inform FFC upon receiving notice of any legal,
administrative, arbitration or other proceedings, demands, notices, audits or
investigations (by any federal, state or local commission, agency or board)
relating to the alleged liability of ALFC or any ALFC Subsidiary under any labor
or employment law.
42
6.3 Access to Properties and Records.
Subject to Section 12.1 hereof, ALFC shall permit FFC reasonable access
upon reasonable notice to its properties and those of the ALFC Subsidiaries, and
shall disclose and make available to FFC during normal business hours all of its
books, papers and records relating to the assets, properties, operations,
obligations and liabilities, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' (other
than minutes that discuss any of the transactions contemplated by this Agreement
or any other subject matter ALFC reasonably determines should be treated as
confidential) and stockholders' meetings, organizational documents, Bylaws,
material contracts and agreements, filings with any regulatory authority,
litigation files, plans affecting employees, and any other business activities
or prospects in which FFC may have a reasonable interest; provided, however,
that ALFC shall not be required to take any action that would provide access to
or to disclose information where such access or disclosure, in ALFC's reasonable
judgment, would interfere with the normal conduct of ALFC's business or would
violate or prejudice the rights or business interests or confidences of any
customer or other person or would result in the waiver by it of the privilege
protecting communications between it and any of its counsel or would be contrary
to any law or regulation applicable to Atlantic Liberty Savings, F.A. ALFC shall
provide and shall request its auditors to provide FFC with such historical
financial information regarding it (and related audit reports and consents) as
FFC may reasonably request for securities disclosure purposes. FFC shall use
commercially reasonable efforts to minimize any interference with ALFC's regular
business operations during any such access to ALFC's property, books and
records. ALFC and each ALFC Subsidiary shall permit FFC, at its expense, to
cause a "phase I environmental audit" and a "phase II environmental audit" to be
performed at any physical location owned or occupied by ALFC or any ALFC
Subsidiary.
6.4 Financial and Other Statements.
6.4.1 Promptly upon receipt thereof, ALFC will furnish to FFC copies of
each annual, interim or special audit of the books of ALFC and the ALFC
Subsidiaries made by its independent accountants and copies of all internal
control reports submitted to ALFC by such accountants in connection with each
annual, interim or special audit of the books of ALFC and the ALFC Subsidiaries
made by such accountants.
6.4.2 As soon as reasonably available, but in no event later than five
business days after such documents are filed with the SEC, ALFC will deliver to
FFC the Securities Documents filed by it with the SEC under the Securities Laws.
Within 25 days after the end of each month ALFC will deliver to FFC a
consolidated balance sheet and a consolidated statement of operations, without
related notes, for such month prepared in accordance with current financial
reporting practices
6.4.3 ALFC will advise FFC promptly of the receipt of any examination
report of any Bank Regulator with respect to the condition or activities of ALFC
or any of the ALFC Subsidiaries.
6.4.4 With reasonable promptness ALFC will furnish to FFC such additional
financial data that ALFC possesses and as FFC may reasonably request, including
without limitation, detailed monthly financial statements and loan reports.
6.5 Maintenance of Insurance.
ALFC shall maintain, and cause the ALFC Subsidiaries to maintain, insurance
in such amounts as are reasonable to cover such risks as are customary in
relation to the character and location of its properties, and the nature of its
business.
43
6.6 Disclosure Supplements.
From time to time prior to the Effective Time, ALFC will promptly
supplement or amend the ALFC Disclosure Schedule delivered in connection
herewith with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to be
set forth or described in such ALFC Disclosure Schedule or which is necessary to
correct any information in such ALFC Disclosure Schedule which has been rendered
materially inaccurate thereby. No supplement or amendment to such ALFC
Disclosure Schedule shall have any effect for the purpose of determining
satisfaction of the conditions set forth in Article IX.
6.7 Consents and Approvals of Third Parties.
ALFC and Atlantic Liberty Savings, F.A. shall use all commercially
reasonable efforts, and shall cause each ALFC Subsidiary to obtain as soon as
practicable all consents and approvals of any other persons necessary or
desirable for the consummation of the transactions contemplated by this
Agreement, including, but not limited to, the approvals necessary to amend
Section 9 of the Federal Stock Charter of Atlantic Liberty Savings, F.A. Without
limiting the generality of the foregoing, ALFC shall utilize the services of a
professional proxy soliciting firm to provide assistance in obtaining the
stockholder vote required to be obtained by it hereunder.
6.8 All Reasonable Efforts.
Subject to the terms and conditions herein provided, ALFC agrees to use,
and agrees to cause Atlantic Liberty Savings, F.A. to use, all commercially
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement.
6.9 Failure to Fulfill Conditions.
In the event that ALFC or Atlantic Liberty Savings, F.A. determines that a
condition to its obligation to complete the Merger cannot be fulfilled and that
it will not waive that condition, it will promptly notify FFC.
6.10 No Solicitation.
From and after the date hereof until the termination of this Agreement,
neither ALFC, nor any ALFC Subsidiary, nor any of their respective officers,
directors, employees, representatives, agents and Affiliates (including, without
limitation, any investment banker, attorney or accountant retained by ALFC or
any of the ALFC Subsidiaries), will, directly or indirectly, initiate, solicit
or knowingly encourage (including by way of furnishing non-public information or
assistance) any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined below),
or enter into or maintain or continue discussions or negotiate with any Person
in furtherance of such inquiries or to obtain an Acquisition Proposal or agree
to or endorse any Acquisition Proposal or authorize or permit any of its
officers, directors, or employees or any of its Subsidiaries or any investment
banker, financial advisor, attorney, accountant or other representative retained
by any of its Subsidiaries to take any such action, and ALFC shall notify FFC
orally (within one business day) and in writing (as promptly as practicable) of
all of the relevant details relating to all inquiries and proposals which it or
any of the ALFC Subsidiaries or any such officer, director or employee, or, to
ALFC's Knowledge, investment banker, financial advisor, attorney, accountant or
other representative of ALFC may receive relating to any of such matters,
provided, however, that nothing contained in this Section 6.10 shall prohibit
the Board of Directors of ALFC from (i) complying with its disclosure
44
obligations under federal or state law; or (ii) furnishing information to, or
entering into discussions or negotiations with, any person or entity that makes
an unsolicited Acquisition Proposal, if, and only to the extent that, (A) the
Board of Directors of ALFC determines in good faith (after consultation with its
financial and legal advisors), taking into account all legal, financial and
regulatory aspects of the proposal and the Person making the proposal, that such
proposal, if consummated, is reasonably likely to result in a transaction more
favorable to ALFC's stockholders from a financial point of view than the Merger;
(B) the Board of Directors of ALFC determines in good faith (after consultation
with its financial and legal advisors) that the failure to furnish information
to or enter into discussions with such Person would likely cause the Board of
Directors to breach its fiduciary duties to stockholders under applicable law
(such proposal that satisfies clauses (A) and (B) being referred to herein as a
"Superior Proposal"); (C) ALFC promptly notifies FFC of such inquiries,
proposals or offers received by, any such information requested from, or any
such discussions or negotiations sought to be initiated or continued with ALFC
or any of its representatives indicating, in connection with such notice, the
name of such Person and the material terms and conditions of any inquiries,
proposals or offers, and receives from such Person an executed confidentiality
agreement in form and substance identical in all material respects to the
confidentiality agreements that ALFC and FFC entered into; and (D) the ALFC
Stockholders Meeting has not occurred. For purposes of this Agreement,
"Acquisition Proposal" shall mean any proposal or offer as to any of the
following (other than the transactions contemplated hereunder) involving ALFC or
any of the ALFC Subsidiaries: (i) any merger, consolidation, share exchange,
business combination, or other similar transactions; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 25% or more of the
assets of ALFC and the ALFC Subsidiaries, taken as a whole, in a single
transaction or series of transactions; (iii) any tender offer or exchange offer
for 25% or more of the outstanding shares of capital stock of ALFC or the filing
of a registration statement under the Securities Act in connection therewith; or
(iv) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
6.11 Employee Benefits.
6.11.1 ALFC shall obtain an agreement (a "Settlement Agreement") in the
form attached to ALFC Disclosure Schedule 6.11.1 from each of Xx. Xxxxxxx and
Xx. Xxxxxxxxx, who are its only officers who have employment agreements, to
accept in full settlement of his rights under the employment agreement the
amounts and benefits determined under his Settlement Agreement and to limit such
amounts so that no amounts are subject to tax under Section 280G of the Code.
The Settlement Agreements for Messrs. Xxxxxxx and Xxxxxxxxx shall require, among
other things, that each of Xx. Xxxxxxx and Xx. Xxxxxxxxx enter into
non-competition agreements and that the employment agreements of each of Xx.
Xxxxxxx and Xx. Xxxxxxxxx be amended in accordance with the terms of their
respective Settlement Agreements. ALFC agrees to amend all of its plans,
including but not limited to the Pension Plan, ESOP and 401(k) Plan to provide
that the income recognized pursuant to the Settlement Agreements and the income
recognized pursuant to the acceleration of vesting of restricted stock shall not
be included as compensation under, or in the calculation of the amounts payable
under, such plans. Except as expressly provided otherwise in this Agreement,
ALFC shall not accelerate the payment of any amounts or benefits that are or may
become payable under this Agreement.
6.11.2 ALFC agrees to cause Atlantic Liberty Savings, F.A. to amend the
Atlantic Liberty Savings, F.A Directors' Retirement Plan ("Directors' Retirement
Plan") by no later than December 31, 2005, in order to cause a "change in
control" to be a triggering event for distributions (without the necessity of
separation from service) and to require the amounts due to each director to be
paid in a lump sum or in installments over five years, in a manner that is
consistent with Code Section 409A. At the Effective Time, Atlantic Liberty
Savings, F.A. shall pay such amounts, which value is set forth in ALFC
Disclosure Schedule 4.13.8, in a lump sum or in installments over five years to
participants. Participants in the Directors' Retirement Plan who are entitled to
benefits in connection with the termination of the Directors' Retirement Plan
45
shall agree to enter into a unanimous written consent to amend such plan
contemporaneously with the execution of this Agreement.
6.12 Reserves and Merger-Related Costs.
On or before the Effective Time, and to the extent consistent with GAAP,
the rules and regulations of the SEC and applicable banking laws and
regulations, ALFC shall establish such additional accruals and reserves as may
be necessary to conform the accounting reserve practices and methods (including
credit loss practices and methods) of ALFC to those of FFC (as such practices
and methods are to be applied to ALFC from and after the Closing Date) and FFC's
plans with respect to the conduct of the business of ALFC following the Merger
and otherwise to reflect Merger-related expenses and costs incurred by ALFC;
provided, however, that ALFC shall not be required to take such action unless
FFC agrees in writing that all conditions to closing set forth in Article IX
have been satisfied or waived (except for the expiration of any applicable
waiting periods). Prior to the delivery by FFC of the writing referred to in the
preceding sentence, ALFC shall provide FFC a written statement, certified
without personal liability by the chief executive officer of ALFC and dated the
date of such writing, that the representation made in Section 4.16.1 hereof is
true as of such date or, alternatively, setting forth in detail the
circumstances that prevent such representation from being true as of such date;
and no accrual or reserve made by ALFC or any ALFC Subsidiary pursuant to this
subsection, or any litigation or regulatory proceeding arising out of any such
accrual or reserve, shall constitute or be deemed to be a breach or violation of
any representation, warranty, covenant, condition or other provision of this
Agreement or to constitute a termination event within the meaning of Section
11.1.2 hereof. No action shall be required to be taken by ALFC pursuant to this
Section 6.11 if, in the opinion of ALFC's independent auditors, such action
would contravene GAAP.
ARTICLE VII
COVENANTS OF FFC
7.1 Conduct of Business.
During the period from the date of this Agreement to the Effective Time,
except with the written consent of ALFC, which consent will not be unreasonably
withheld, conditioned or delayed, FFC will, and it will cause each FFC
Subsidiary to: conduct its business in the usual, regular and ordinary course
consistent with past practices; use reasonable efforts to preserve intact its
business organization and assets and maintain its rights and franchises; and
voluntarily take no action that would: (i) adversely affect the ability of the
parties to obtain the Regulatory Approvals or materially increase the period of
time necessary to obtain such approvals; (ii) adversely affect its ability to
perform its covenants and agreements under this Agreement; (iii) result in the
representations and warranties contained in Article V of this Agreement not
being true and correct on the date of this Agreement or at any future date on or
prior to the Closing Date or in any of the conditions set forth in Article IX
hereof not being satisfied; (iv) change or waive any provision of its
Certificate of Incorporation or Charter, except as required by law; or (v)
change any method, practice or principle of accounting, except as may be
required from time to time by GAAP (without regard to any optional early
adoption date) or any Bank Regulator responsible for regulating FFC or Flushing
Savings Bank, FSB.
7.2 Current Information and Consultation.
During the period from the date of this Agreement to the Effective Time,
FFC will cause one or more of its representatives to confer with representatives
of ALFC and report the general status of its financial condition, operations and
46
business and matters relating to the completion of the transactions contemplated
hereby, at such times as ALFC may reasonably request. FFC will promptly notify
ALFC, to the extent permitted by applicable law, of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of material litigation involving
FFC and any FFC Subsidiary.
7.3 Disclosure Supplements.
From time to time prior to the Effective Time, FFC will promptly supplement
or amend the FFC Disclosure Schedule delivered in connection herewith with
respect to any matter hereafter arising which, if existing, occurring or known
at the date of this Agreement, would have been required to be set forth or
described in such FFC Disclosure Schedule or which is necessary to correct any
information in such FFC Disclosure Schedule which has been rendered inaccurate
thereby. No supplement or amendment to such FFC Disclosure Schedule shall have
any effect for the purpose of determining satisfaction of the conditions set
forth in Article IX.
7.4 Consents and Approvals of Third Parties.
FFC and Flushing Savings Bank, FSB shall use all commercially reasonable
efforts to obtain as soon as practicable all consents and approvals of any other
Persons necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
7.5 All Reasonable Efforts.
Subject to the terms and conditions herein provided, FFC agrees to use and
agrees to cause Flushing Savings Bank, FSB to use all commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement.
7.6 Failure to Fulfill Conditions.
In the event that FFC or Flushing Savings Bank, FSB determines that a
condition to its obligation to complete the Merger cannot be fulfilled and that
it will not waive that condition, it will promptly notify ALFC.
7.7 Employee Benefits; Advisory Board.
7.7.1 FFC will review all other ALFC Compensation and Benefit Plans to
determine whether to maintain, terminate or continue such plans. In the event
employee compensation and/or benefits as currently provided by ALFC or Atlantic
Liberty Savings, F.A. are changed or terminated by FFC, in whole or in part, FFC
shall provide Continuing Employees (as defined below in Section 7.7.6) with
compensation and benefits that are, in the aggregate, substantially similar to
the compensation and benefits provided to similarly situated FFC employees (as
of the date any such compensation or benefit is provided). All ALFC Employees
who become participants in an FFC Compensation and Benefit Plan shall, for
purposes of determining eligibility for and for any applicable vesting periods
of such employee benefits only (and not for benefit accrual purposes) be given
credit for meeting eligibility and vesting requirements in such plans for
service as an employee of ALFC or Atlantic Liberty Savings, F.A. or any
predecessor thereto prior to the Effective Time. FFC and Flushing Savings Bank
shall use commercially reasonable efforts to provide employment to all
non-executive employees of Atlantic Liberty Savings, F.A., provided, however,
that this Agreement shall not be construed to limit the ability of FFC or
Flushing Savings Bank, FSB to terminate the employment of any employee or to
review employee benefits programs from time to time and to make such changes as
they deem appropriate.
47
7.7.2 The ALFC ESOP shall be terminated as of, or prior to, the Effective
Time (all shares held by the ALFC ESOP shall be converted into the right to
receive the Merger Consideration, as elected by the ALFC ESOP participants), all
outstanding ALFC ESOP indebtedness shall be repaid as soon as practicable
following the Effective Date, and the balance of the shares and any other assets
remaining in the loan suspense account shall be allocated and distributed to
ALFC ESOP participants (subject to the receipt of a favorable determination
letter from the IRS), as provided for in the ALFC ESOP and unless otherwise
required by applicable law. Prior to the Effective Time, ALFC, and following the
Effective Time, FFC shall use their respective best efforts in good faith to
obtain such favorable determination letter (including, but not limited to,
making such changes to the ESOP and the proposed allocations as may be requested
by the IRS as a condition to its issuance of a favorable determination letter).
ALFC and following the Effective Time, FFC, will adopt such amendments to the
ALFC ESOP as may be reasonably required by the IRS as a condition to granting
such favorable determination letter on termination. Neither ALFC, nor following
the Effective Time, FFC shall make any distribution from the ALFC ESOP except as
may be required by applicable law until receipt of such favorable determination
letter. In the case of a conflict between the terms of this Section and the
terms of the ALFC ESOP, the terms of the ALFC ESOP shall control, however, in
the event of any such conflict, ALFC before the Merger, and FFC, after the
Merger, shall use their best efforts to cause the ALFC ESOP to be amended to
conform to the requirements of this Section.
7.7.3 In the event of any termination of any ALFC or Atlantic Liberty
Savings, F.A. health plan or consolidation of any such plan with any FFC or
Flushing Savings Bank, FSB health plan, FFC shall make available to employees of
ALFC or Atlantic Liberty Savings, F.A. who continue employment with FFC or a FFC
Subsidiary ("Continuing Employees") and their dependents employer-provided
health coverage on the same basis as it provides such coverage to FFC employees.
Unless a Continuing Employee affirmatively terminates coverage under a ALFC
health plan prior to the time that such Continuing Employee becomes eligible to
participate in the FFC health plan, no coverage of any of the Continuing
Employees or their dependents shall terminate under any of the ALFC health plans
prior to the time such Continuing Employees and their dependents become eligible
to participate in the health plans, programs and benefits common to all
employees of FFC and their dependents. In the event of a termination or
consolidation of any ALFC health plan, terminated ALFC employees and qualified
beneficiaries will have the right to continued coverage under group health plans
of FFC in accordance with Code Section 4980B(f), consistent with the provisions
below. In the event of any termination of any ALFC health plan, or consolidation
of any ALFC health plan with any FFC health plan, individuals covered by the
ALFC health plan shall be entitled to immediate coverage under the FCC health
plan in accordance with the Health Insurance Portability and Accountability Act
of 1996 ("HIPAA") and the regulations issued thereunder, including limitations
on pre-existing condition exclusions, nondiscrimination and special enrollment
rights. All ALFC employees who cease participating in a ALFC health plan and
become participants in a comparable FFC health plan shall receive credit for any
co-payment and deductibles paid under ALFC's health plan for purposes of
satisfying any applicable deductible or out-of-pocket requirements under the FFC
health plan, upon substantiation, in a form satisfactory to FFC that such
co-payment and/or deductible has been satisfied.
7.7.4 Effective as of the Closing Date, FFC shall establish an Advisory
Board (the "Advisory Board"). Each person who serves on the Board of Directors
of ALFC or Atlantic Liberty Savings, F.A. both on the date of this Agreement and
immediately prior to the Effective Time and the current Corporate Secretary of
ALFC, shall be appointed to the Advisory Board effective immediately following
the Effective Time. The Advisory Board shall meet quarterly, and each advisory
board member shall receive an annual retainer of $15,000 and a quarterly
advisory board fee of $1,000. The advisory board fee shall be paid quarterly for
each meeting attended. The Advisory Board shall be continued for a period of
three years.
48
7.8 Directors and Officers Indemnification and Insurance.
7.8.1 FFC shall maintain, or shall cause Flushing Savings Bank, FSB to
maintain, in effect for six years following the Effective Time, the current
directors' and officers' liability insurance policies maintained by ALFC
(provided, that FFC may substitute therefor policies of at least the same
coverage containing terms and conditions which are not materially less
favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that in no event shall FFC be required to expend annually
pursuant to this Section 7.9.1 more than 150% of the annual cost currently
expended by ALFC with respect to such insurance (the "Maximum Amount");
provided, further, that if the amount of the annual premiums necessary to
maintain or procure such insurance coverage exceed the Maximum Amount, FFC shall
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Amount. In connection with
the foregoing, ALFC agrees in order for FFC to fulfill its agreement to provide
directors and officers liability insurance policies for six years to provide
such insurer or substitute insurer with such representations as such insurer may
request with respect to the reporting of any prior claims.
7.8.2 In addition to Section 7.8.1, for a period of six years after the
Effective Time, FFC shall indemnify, defend and hold harmless each person who is
now, or who has been at any time before the date hereof or who becomes before
the Effective Time, an officer or director of ALFC or an ALFC Subsidiary (the
"Indemnified Parties") against all losses, claims, damages, costs, expenses
(including attorneys' fees), liabilities or judgments or amounts that are paid
in settlement (which settlement shall require the prior written consent of FFC,
which consent shall not be unreasonably withheld, conditioned or delayed) of or
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, or administrative (each a "Claim"), in which an Indemnified
Party is, or is threatened to be made, a party or witness in whole or in part on
or arising in whole or in part out of the fact that such person is or was a
director, officer or employee of ALFC or a ALFC Subsidiary if such Claim
pertains to any matter of fact arising, existing or occurring before the
Effective Time (including, without limitation, the Merger and the other
transactions contemplated hereby), regardless of whether such Claim is asserted
or claimed before, or after, the Effective Time (the "Indemnified Liabilities"),
to the fullest extent permitted under Delaware law (to the extent not prohibited
by federal law), FFC's Certificate of Incorporation and Bylaws, and under ALFC's
Certificate of Incorporation and Bylaws. FFC shall pay expenses in advance of
the final disposition of any such action or proceeding to each Indemnified Party
to the fullest extent permitted by Delaware law (to the extent not prohibited by
federal law) upon receipt of an undertaking to repay such advance payments if
the Indemnified Party shall be adjudicated or determined to be not entitled to
indemnification in the manner set forth below. Any Indemnified Party wishing to
claim indemnification under this Section 7.8.2 upon learning of any Claim, shall
notify FFC (but the failure so to notify FFC shall not relieve it from any
liability which it may have under this Section 7.8.2, except to the extent such
failure materially prejudices FFC) and shall deliver to FFC the undertaking
referred to in the previous sentence. In the event of any such Claim (whether
arising before or after the Effective Time) (1) FFC shall have the right to
assume the defense thereof (in which event the Indemnified Parties will
cooperate in the defense of any such matter) and upon such assumption FFC shall
not be liable to any Indemnified Party for any legal expenses of other counsel
or any other expenses subsequently incurred by any Indemnified Party in
connection with the defense thereof, except that if FFC elects not to assume
such defense, or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are or may be (whether or not any have yet
actually arisen) issues which raise conflicts of interest between FFC and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them, and FFC shall pay the reasonable fees and expenses of such
counsel for the Indemnified Parties, (2) except to the extent otherwise required
due to conflicts of interest, FFC shall be obligated pursuant to this paragraph
to pay for only one firm of counsel for all Indemnified Parties whose reasonable
fees and expenses shall be paid promptly as statements are received unless there
is a conflict of interest that necessitates more than one law firm, (3) FFC
49
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld, conditioned or
delayed), and (4) no Indemnified Party shall be entitled to indemnification
hereunder with respect to a matter as to which (x) he shall have been
adjudicated in any proceeding not to have acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of ALFC or
any ALFC Subsidiary, or (y) in the event that a proceeding is compromised or
settled so as to impose any liability or obligation upon an Indemnified Party,
if there is a determination that with respect to said matter said Indemnified
Party did not act in good faith and in a manner he reasonably believed to be in,
or not opposed to, the best interests of ALFC or any ALFC Subsidiary. Such
determination shall be made in accordance with the DGCL.
7.8.3 In the event that either FFC or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving bank or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision shall be made so that the
successors and assigns of FFC shall assume the obligations set forth in this
Section 7.8.
7.8.4 The obligations of FFC provided under this Section 7.8 are intended
to be enforceable against FFC directly by the Indemnified Parties and shall be
binding on all respective successors and permitted assigns of FFC. FFC shall pay
all reasonable costs, including attorneys' fees, that may be incurred by any
Indemnified Party in successfully enforcing the indemnity and other obligations
provided for in this Section 7.8 to the fullest extent permitted under
applicable law.
7.9 Stock Listing.
FFC agrees to list on the NASDAQ (or such other national securities
exchange on which the shares of the FFC Common Stock shall be listed as of the
Closing Date), subject to official notice of issuance, the shares of FFC Common
Stock to be issued in the Merger.
7.10 Stock and Cash Reserve.
FFC agrees at all times from the date of this Agreement until the Merger
Consideration has been paid in full to reserve a sufficient number of shares of
FFC Common Stock and to maintain sufficient liquid accounts or borrowing
capacity to fulfill its obligations under this Agreement.
7.11 Section 16(b) Exemption.
FFC and ALFC agree that, both prior to and after the Effective Time, it is
desirable that ALFC Insiders (as defined below) not be subject to a risk of
liability under Section 16(b) of the Exchange Act, to the fullest extent
permitted by applicable law, in connection with the conversion of shares of ALFC
Common Stock into shares of FFC in the Merger, and for that purpose agree to the
provisions of this Section 7.11. Assuming that ALFC delivers to FFC the ALFC
Section 16 Information (as defined below) in a timely fashion prior to the
Effective Time, the Board of Directors of FFC, or a committee of non-employee
directors thereof (as such term is defined for purposes of Rule 16b-3(d) under
the Exchange Act), shall reasonably promptly thereafter and in any event prior
to the Effective Time adopt a resolution providing in substance that the receipt
by the ALFC Insiders (as defined below) of FFC Common Stock in exchange for
shares of ALFC Common Stock, pursuant to the transactions contemplated hereby
and to the extent such securities are listed in the ALFC Section 16 Information,
are intended to be exempt from liability pursuant to Section 16(b) under the
Exchange Act to the fullest extent permitted by applicable law. "ALFC Section 16
Information" shall mean information accurate in all material respects regarding
the ALFC Insiders and the number of shares of ALFC Common Stock held by each
such ALFC Insider and expected to be exchanged for FFC Common Stock in the
Merger. "ALFC Insiders" shall mean those officers and directors of ALFC who are
50
subject to the reporting requirements of Section 16(a) of the Exchange Act and
who are expected to be subject to Section 16(a) of the Exchange Act with respect
to FFC Common Stock subsequent to the Effective Time.
ARTICLE VIII
REGULATORY AND OTHER MATTERS
8.1 Meetings of Stockholders.
8.1.1 ALFC will (i) as promptly as practicable after the Merger
Registration Statement is declared effective by the SEC, take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders, which may be an annual meeting, for the purpose of considering
this Agreement and the Merger, and for such other purposes as may be, in ALFC's
reasonable judgment, necessary or desirable (the "ALFC Stockholders Meeting"),
(ii) in connection with the solicitation of proxies with respect to the ALFC
Stockholders Meeting, have its Board of Directors recommend approval of this
Agreement to the ALFC stockholders; and (iii) cooperate and consult with FFC
with respect to each of the foregoing matters. The Board of Directors of ALFC
may fail to make such a recommendation referred to in clause (ii) above, or
withdraw, modify or change any such recommendation only if such Board of
Directors, after having consulted with and considered the advice of its outside
financial and legal advisors, has determined that the making of such
recommendation, or the failure so to withdraw, modify or change its
recommendation, would constitute a breach of the fiduciary duties of such
directors under applicable law.
8.2 Proxy Statement-Prospectus; Merger Registration Statement.
8.2.1 For the purposes (x) of registering FFC Common Stock to be offered to
holders of ALFC Common Stock in connection with the Merger with the SEC under
the Securities Act and (y) of holding the ALFC Stockholders Meeting, FFC shall
draft and prepare, and ALFC shall cooperate in the preparation of, the Merger
Registration Statement, including a proxy statement/prospectus satisfying all
applicable requirements of applicable state securities and banking laws, and of
the Securities Act and the Exchange Act, and the rules and regulations
thereunder (such proxy statement/prospectus in the form mailed by ALFC to the
ALFC stockholders, together with any and all amendments or supplements thereto,
being herein referred to as the "Proxy Statement-Prospectus"). FFC shall provide
ALFC and its counsel with appropriate opportunity to review and comment on the
Proxy Statement-Prospectus prior to the time it is initially filed with the SEC
or any amendments are filed with the SEC. Provided that ALFC has reasonably
cooperated in all material respects as described in Section 8.2.2 below, FFC
shall file the Merger Registration Statement, including the Proxy
Statement-Prospectus, with the SEC. Each of FFC and ALFC shall use their best
efforts to have the Merger Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing, and ALFC shall
thereafter promptly mail the Proxy Statement-Prospectus to its stockholders. FFC
shall also use its best efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement, and ALFC shall furnish all information
concerning ALFC and the holders of ALFC Common Stock as may be reasonably
requested in connection with any such action.
8.2.2 ALFC shall provide FFC with any information concerning itself that
FFC may reasonably request in connection with the drafting and preparation of
the Proxy Statement-Prospectus, and FFC shall notify ALFC promptly of the
receipt of any comments of the SEC with respect to the Proxy
Statement-Prospectus and of any requests by the SEC for any amendment or
supplement thereto or for additional information and shall provide promptly to
ALFC copies of all correspondence between FFC or any of its representatives and
the SEC. FFC shall give ALFC and its counsel the opportunity to review and
51
comment on the Proxy Statement-Prospectus prior to its being filed with the SEC
and shall give ALFC and its counsel the opportunity to review and comment on all
amendments and supplements to the Proxy Statement-Prospectus and all responses
to requests for additional information and replies to comments prior to their
being filed with, or sent to, the SEC. Each of FFC and ALFC agrees to use all
reasonable efforts, after consultation with the other party hereto, to respond
promptly to all such comments of and requests by the SEC and to cause the Proxy
Statement-Prospectus and all required amendments and supplements thereto to be
mailed to the holders of ALFC Common Stock entitled to vote at the ALFC
Stockholders Meeting hereof at the earliest practicable time.
8.2.3 ALFC and FFC shall promptly notify the other party if at any time it
becomes aware that the Proxy Statement-Prospectus or the Merger Registration
Statement contains any untrue statement of a material fact or omits to state a
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. In such event, ALFC shall cooperate with FFC in the preparation of a
supplement or amendment to such Proxy Statement-Prospectus that corrects such
misstatement or omission, and FFC shall file an amended Merger Registration
Statement with the SEC, and ALFC shall mail an amended Proxy
Statement-Prospectus to ALFC's stockholders.
8.3 Regulatory Approvals.
Each of ALFC and FFC will cooperate with the other and use all reasonable
efforts to promptly prepare and file all necessary documentation to obtain the
Regulatory Approvals. ALFC and FFC will furnish each other and each other's
counsel with all information concerning themselves, their respective
Subsidiaries, directors, officers and stockholders and such other matters as may
be necessary or advisable in connection with any application, petition or other
statement made by or on behalf of ALFC or FFC to any Bank Regulator or
governmental body in connection with the Merger and the other transactions
contemplated by this Agreement. Each party acknowledges that time is of the
essence in connection with the preparation and filing of the documentation
referred to above. ALFC shall have the right to review and approve in advance
all characterizations of the information relating to ALFC and any of the ALFC
Subsidiaries which appear in any filing made in connection with the transactions
contemplated by this Agreement with any governmental body. In addition, ALFC and
FFC shall each furnish to the other for review a copy of each such filing made
in connection with the transactions contemplated by this Agreement with any
governmental body prior to its filing.
8.4 Affiliates.
ALFC shall use all reasonable efforts to cause each director, executive
officer and other person who is an "affiliate" (for purposes of Rule 145 under
the Securities Act) of ALFC to deliver to FFC, as soon as practicable after the
date of this Agreement, and at least thirty (30) days prior to the Closing Date,
a written agreement, in the form of Exhibit C hereto, providing that such person
will not sell, pledge, transfer or otherwise dispose of any shares of FFC Common
Stock to be received by such "affiliate" as a result of the Merger otherwise
than in compliance with the applicable provisions of the Securities Act and the
rules and regulations thereunder.
52
ARTICLE IX
CLOSING CONDITIONS
9.1 Conditions to Each Party's Obligations under this Agreement.
The respective obligations of each party under this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions, none of which may be waived:
9.1.1 Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved by the requisite vote of the
stockholders of ALFC.
9.1.2 Injunctions. None of the parties hereto shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction, and
no statute, rule or regulation shall have been enacted, entered, promulgated,
interpreted, applied or enforced by any Governmental Entity or Bank Regulator,
that enjoins or prohibits the consummation of the transactions contemplated by
this Agreement.
9.1.3 Regulatory Approvals. All required Regulatory Approvals shall have
been obtained and shall remain in full force and effect and all waiting periods
relating thereto shall have expired; and no such Regulatory Approval shall
include any condition or requirement, excluding standard conditions that are
normally imposed by the regulatory authorities in bank merger transactions, that
would, in the good faith reasonable judgment of the Board of Directors of FFC,
materially and adversely affect the business, operations, financial condition,
property or assets of the combined enterprise of ALFC, Atlantic Liberty Savings,
F.A. and FFC or otherwise materially impair the value of ALFC or Atlantic
Liberty Savings, F.A. to FFC.
9.1.4 Effectiveness of Merger Registration Statement. The Merger
Registration Statement shall have become effective under the Securities Act and
no stop order suspending the effectiveness of the Merger Registration Statement
shall have been issued, and no proceedings for that purpose shall have been
initiated or threatened by the SEC and, if the offer and sale of FFC Common
Stock in the Merger is subject to the blue sky laws of any state, shall not be
subject to a stop order of any state securities commissioner.
9.1.5 NASDAQ Listing. The shares of FFC Common Stock to be issued in the
Merger shall have been authorized for listing on the NASDAQ, subject to official
notice of issuance.
9.1.6 Tax Opinions. On the basis of facts, representations and assumptions
which shall be consistent with the state of facts existing at the Closing Date,
FFC shall have received an opinion of Xxxxxxx Xxxxxxxx & Xxxx LLP reasonably
acceptable in form and substance to FFC, and ALFC shall have received an opinion
of Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C. reasonably acceptable in form and
substance to ALFC, each dated as of the Closing Date, substantially to the
effect that, for Federal income tax purposes:
(A) The Merger, when consummated in accordance with the terms hereof,
either will constitute a reorganization within the meaning of Section
368(a) of the Code or will be treated as part of a reorganization within
the meaning of Section 368(a) of the Code;
(B) The merger of Atlantic Liberty Savings, F.A. into Flushing Savings
Bank, FSB will not adversely affect the Merger qualifying as a
Reorganization within the meaning of Section 368(a) of the Code;
53
(C) No gain or loss will be recognized by FFC, Flushing Savings Bank,
FSB, ALFC or Atlantic Liberty Savings, F.A. by reason of the Merger;
(D) The exchange of ALFC Common Stock to the extent exchanged for FFC
Common Stock will not give rise to recognition of gain or loss for Federal
income tax purposes to the stockholders of ALFC;
(E) The basis of the FFC Common Stock to be received (including any
fractional shares deemed received for tax purposes) by a ALFC stockholder
will be the same as the basis of the ALFC Common Stock surrendered pursuant
to the Merger in exchange therefor, increased by any gain recognized by
such ALFC stockholder as a result of the Merger and decreased by any cash
received by such ALFC stockholder in the Merger; and
(F) The holding period applicable to the shares of FFC Common Stock to
be received by a stockholder of ALFC will include the period during which
the stockholder held the shares of ALFC Common Stock surrendered in
exchange therefor, provided the ALFC Common Stock surrendered is held as a
capital asset at the Effective Time.
9.2 Conditions to the Obligations of FFC under this Agreement.
The obligations of FFC under this Agreement shall be further subject to the
satisfaction of the conditions set forth in Sections 9.2.1 through 9.2.5 at or
prior to the Closing Date:
9.2.1 Representations and Warranties. Each of the representations and
warranties of ALFC set forth in this Agreement shall be true and correct as of
the date of this Agreement and upon the Effective Time with the same effect as
though all such representations and warranties had been made at the Effective
Time (except to the extent such representations and warranties speak as of an
earlier date), in any case subject to the standard set forth in Section 4.1; and
ALFC shall have delivered to FFC a certificate to such effect signed by the
Chief Executive Officer and the Chief Financial Officer of ALFC as of the
Effective Time.
9.2.2 Agreements and Covenants. ALFC shall have performed in all material
respects all obligations and complied in all material respects with all
agreements or covenants to be performed or complied with by it at or prior to
the Effective Time, and FFC shall have received a certificate signed on behalf
of ALFC by the Chief Executive Officer and Chief Financial Officer of ALFC to
such effect dated as of the Effective Time.
9.2.3 Permits, Authorizations, Etc. ALFC and the ALFC Subsidiaries shall
have obtained any and all material permits, authorizations, consents, waivers,
clearances or approvals required for the lawful consummation of the Merger and
the Bank Merger.
ALFC will furnish FFC with such certificates of its officers or others and
such other documents to evidence fulfillment of the conditions set forth in this
Section 9.2 as FFC may reasonably request.
9.3 Conditions to the Obligations of ALFC under this Agreement.
The obligations of ALFC under this Agreement shall be further subject to
the satisfaction of the conditions set forth in Sections 9.3.1 through 9.3.5 at
or prior to the Closing Date:
9.3.1 Representations and Warranties. Each of the representations and
warranties of FFC set forth in this Agreement shall be true and correct as of
the date of this Agreement and upon the Effective Time with the same effect as
54
though all such representations and warranties had been made at the Effective
Time (except to the extent such representations and warranties speak as of an
earlier date), in any case subject to the standard set forth in Section 5.1; and
FFC shall have delivered to ALFC a certificate to such effect signed by the
Chief Executive Officer and the Chief Financial Officer of FFC as of the
Effective Time.
9.3.2 Agreements and Covenants. FFC shall have performed in all material
respects all obligations and complied in all material respects with all
agreements or covenants to be performed or complied with by each of them at or
prior to the Effective Time, and ALFC shall have received a certificate signed
on behalf of FFC by the Chief Executive Officer and Chief Financial Officer of
FFC to such effect dated as of the Effective Time.
9.3.3 Permits, Authorizations, Etc. FFC and its Subsidiaries shall have
obtained any and all material permits, authorizations, consents, waivers,
clearances or approvals required for the lawful consummation of the Merger and
the Bank Merger, the failure to obtain which would have a Material Adverse
Effect on FFC and the FFC Subsidiaries, taken as a whole.
9.3.4 Payment of Merger Consideration. FFC shall have delivered the
Exchange Fund to the Exchange Agent on or before the Closing Date and the
Exchange Agent shall provide ALFC with a certificate evidencing such delivery.
FFC will furnish ALFC with such certificates of their officers or others
and such other documents to evidence fulfillment of the conditions set forth in
this Section 9.3 as ALFC may reasonably request.
ARTICLE X
THE CLOSING
10.1 Time and Place.
Subject to the provisions of Articles IX and XI hereof, the Closing of the
transactions contemplated hereby shall take place at the offices of Xxxxxxx
Xxxxxxxx & Xxxx LLP, 2 World Financial Center, Xxx Xxxx, Xxx Xxxx 00000, at
10:00 a.m., or at such other place or time upon which FFC and ALFC mutually
agree. A pre-closing of the transactions contemplated hereby (the "Pre-Closing")
shall take place at the offices of Xxxxxxx Xxxxxxxx & Wood LLP, 2 World
Financial Center, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m. on the day prior to
the Closing Date.
10.2 Deliveries at the Pre-Closing and the Closing.
At the Pre-Closing there shall be delivered to FFC and ALFC the opinions,
certificates, and other documents and instruments required to be delivered at
the Closing under Article IX hereof. At or prior to the Closing, FFC shall
deliver the Merger Consideration as set forth under Section 9.3.4 hereof.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination.
This Agreement may be terminated at any time prior to the Closing Date,
whether before or after approval of the Merger by the stockholders of ALFC:
55
11.1.1 At any time by the mutual written agreement of FFC and ALFC;
11.1.2 By either party (provided, that the terminating party is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a material breach of any of the
representations or warranties set forth in this Agreement on the part of the
other party, which breach by its nature cannot be cured prior to the Termination
Date or shall not have been cured within 30 days after written notice of such
breach by the terminating party to the other party;
11.1.3 By either party (provided, that the terminating party is not then in
material breach of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a material failure to perform or
comply with any of the covenants or agreements set forth in this Agreement on
the part of the other party, which failure by its nature cannot be cured prior
to the Termination Date or shall not have been cured within 30 days after
written notice of such failure by the terminating party to the other party;
11.1.4 At the election of either party, if the Closing shall not have
occurred by the Termination Date, or such later date as shall have been agreed
to in writing by FFC and ALFC; provided, that no party may terminate this
Agreement pursuant to this Section 11.1.4 if the failure of the Closing to have
occurred on or before said date was due to such party's material breach of any
representation, warranty, covenant or other agreement contained in this
Agreement;
11.1.5 By either party, if the stockholders of ALFC shall have voted at the
ALFC Stockholders Meeting on the transactions contemplated by this Agreement and
such vote shall not have been sufficient to approve such transactions;
11.1.6 By either party if (i) final action has been taken by a Bank
Regulator whose approval is required in connection with this Agreement and the
transactions contemplated hereby, which final action (x) has become unappealable
and (y) does not approve this Agreement or the transactions contemplated hereby,
(ii) any Bank Regulator whose approval or nonobjection is required in connection
with this Agreement and the transactions contemplated hereby has stated that it
will not issue the required approval or nonobjection, or (iii) any court of
competent jurisdiction or other governmental authority shall have issued an
order, decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and unappealable;
11.1.7 By the Board of Directors of either party (provided, that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) in the event that any of
the conditions precedent to the obligations of such party to consummate the
Merger cannot be satisfied or fulfilled by the date specified in Section 11.1.4
of this Agreement;
11.1.8 By the Board of Directors of FFC if ALFC has received a Superior
Proposal and the Board of Directors of ALFC has entered into an acquisition
agreement with respect to the Superior Proposal, terminated this Agreement,
withdrawn its recommendation of this Agreement, has failed to make such
recommendation or has modified or qualified its recommendation in a manner
adverse to FFC;
11.1.9 By the Board of Directors of ALFC if ALFC has received a Superior
Proposal and the Board of Directors of ALFC has made a determination to accept
such Superior Proposal; provided that ALFC shall not terminate this Agreement
pursuant to this Section 11.1.9 and enter in a definitive agreement with respect
to the Superior Proposal until the expiration of five business days following
56
FFC's receipt of written notice advising FFC that ALFC has received a Superior
Proposal, specifying the material terms and conditions of such Superior Proposal
(and including a copy thereof with all accompanying documentation, if in
writing) identifying the person making the Superior Proposal and stating whether
ALFC intends to enter into a definitive agreement with respect to the Superior
Proposal. After providing such notice, ALFC shall provide a reasonable
opportunity to FFC during the five-day period to make such adjustments in the
terms and conditions of this Agreement as would enable ALFC to proceed with the
Merger on such adjusted terms; or
11.1.10 By ALFC, if its Board of Directors so determines by a majority vote
of the members of its entire Board, at any time during the five business-day
period commencing on the Determination Date if both of the following conditions
are satisfied:
(i) The FFC Market Value on the Determination Date is less than 85% of
the Initial FFC Market Value, adjusted to reflect any stock dividend,
reclassification, recapitalization, split-up, combination, exchange of shares or
similar transaction by FFC between the date of this Agreement and the
Determination Date; and
(ii) the number obtained by dividing the FFC Market Value on the
Determination Date by the Initial FFC Market Value shall be less than the
quotient obtained by dividing the Final Index Price by the Initial Index Price,
minus 0.15; subject, however, to the following three sentences. If ALFC elects
to exercise its termination right pursuant to this Section 11.1.10, it shall
give prompt written notice thereof to FFC. During the five business-day period
commencing with its receipt of such notice, FFC shall have the option to
increase the consideration to be received by the holders of ALFC Common Stock
who elect to receive FFC Common Stock hereunder by adjusting the Exchange Ratio
to one of the following quotients at its sole discretion: (i) a quotient, the
numerator of which is equal to the product of the Initial FFC Market Value, the
Exchange Ratio (as then in effect), and the Index Ratio minus 0.15, and the
denominator of which is equal to the FFC Market Value on the Determination Date;
or (ii) the quotient determined by dividing the Initial FFC Market Value by the
FFC Market Value on the Determination Date, and multiplying the quotient by the
product of the Exchange Ratio (as then in effect) and 0.85. If FFC so elects, it
shall give, within such five business-day period, written notice to ALFC of such
election and the revised Exchange Ratio, whereupon no termination shall be
deemed to have occurred pursuant to this Section 11.1.10 and this Agreement
shall remain in full force and effect in accordance with its terms (except as
the Exchange Ratio shall have been so modified).
For purposes of this Section 11.1.10, the following terms shall have the
meanings indicated below:
"Acquisition Transaction" shall mean (i) a merger or consolidation, or any
similar transaction, involving the relevant companies, (ii) a purchase, lease or
other acquisition of all or substantially all of the assets of the relevant
companies, (iii) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10% or
more of the voting power of the relevant companies; or (iv) an agreement or
commitment by the relevant companies to take any action referenced above.
"Determination Date" shall mean the first date on which all Regulatory
Approvals (and waivers, if applicable) necessary for consummation of the Merger
have been received (disregarding any waiting period).
"Final Index Price" means the sum of the Final Prices for each company
comprising the Index Group multiplied by the weighting set forth opposite such
company's name in the definition of Index Group below.
57
"Final Price," with respect to any company belonging to the Index Group,
means the average of the daily closing sales prices of a share of common stock
of such company (and if there is no closing sales price on any such day, then
the mean between the closing bid and the closing asked prices on that day), as
reported on the consolidated transaction reporting system for the market or
exchange on which such common stock is principally traded, for the twenty
consecutive trading days immediately preceding the Determination Date.
"Index Group" means the financial institution holding companies listed
below, the common stock of all of which shall be publicly traded and as to which
there shall not have been an Acquisition Transaction involving such company
publicly announced at any time during the period beginning on the date of this
Agreement and ending on the Determination Date. In the event that the common
stock of any such company ceases to be publicly traded or an Acquisition
Proposal for such company to be acquired, or for such company to acquire another
company in a transaction with a value exceeding 25% of the acquiror's market
capitalization based on the table below, is announced at any time during the
period beginning on the date of this Agreement and ending on the Determination
Date, such company will be removed from the Index Group, and the weights
attributed to the remaining companies will be adjusted proportionately for
purposes of determining the Final Index Price and the Initial Index Price. The
financial institution holding companies and the weights attributed to them are
as follows:
Peer Group Index
-------------------------------------------------------------------------------------------------------------------------
Component Companies
Trading Market Weight
Symbol Company Exchange City State Cap($M) (%)
-------------------------------------------------------------------------------------------------------------------------
1 ABCW Anchor BanCorp Wisconsin NASDAQ Madison WI $686.5 4.7414
2 BKMU Bank Mutual Corp. NASDAQ Milwaukee WI $669.6 4.6251
3 BBX BankAtlantic Bancorp Inc. NYSE Fort Lauderdale FL $783.3 5.4100
4 BFIN BankFinancial Corp NASDAQ Xxxx Ridge IL $361.4 2.4960
5 BKUNA BankUnited Financial Corp. NASDAQ Coral Gables FL $765.1 5.2845
6 BHLB Berkshire Hills Bancorp Inc. NASDAQ Pittsfield MA $280.6 1.9382
0 XXXX Xxxxxxxxx Xxxxxxx Xxx. XXXXXX Xxxxxxxxx XX $857.9 5.9253
8 CFCP Coastal Financial Corp. NASDAQ Myrtle Beach SC $263.7 1.8212
9 CCBI Commercial Capital Bancorp NASDAQ Irvine CA $945.4 6.5295
10 DCOM Dime Community Bancshares Inc. NASDAQ Brooklyn NY $554.1 3.8273
11 FFFL Fidelity Bankshares Inc. NASDAQ West Palm Beach FL $777.6 5.3710
12 FFCH First Financial Holdings Inc. NASDAQ Charleston SC $372.3 2.5716
13 FPFC First Place Financial Corp. NASDAQ Warren OH $356.1 2.4597
14 FED FirstFed Financial Corp. NYSE Santa Monica CA $867.4 5.9911
15 FBTX Franklin Bank Corp. NASDAQ Houston TX $420.3 2.9029
16 HARB Harbor Florida Bancshares Inc. NASDAQ Fort Xxxxxx FL $929.8 6.4223
17 KNBT KNBT Bancorp Inc. NASDAQ Bethlehem PA $520.2 3.5932
18 NASB NASB Financial Inc. NASDAQ Grandview MO $321.9 2.2235
19 OCFC OceanFirst Financial Corp. NASDAQ Toms River NJ $308.9 2.1336
20 PRTR Partners Trust Financial NASDAQ Utica NY $592.2 4.0900
21 PFSB PennFed Financial Services Inc NASDAQ West Orange NJ $250.7 1.7314
22 PFB PFF Bancorp Inc. NYSE Pomona CA $761.8 5.2615
23 PBNY Provident New York Bancorp NASDAQ Montebello NY $510.3 3.5248
24 TONE TierOne Corp. NASDAQ Lincoln NE $550.0 3.7988
25 UCFC United Community Finl Corp. NASDAQ Youngstown OH $363.0 2.5072
26 WSFS WSFS Financial Corp. NASDAQ Wilmington DE $408.1 2.8188
58
"Index Ratio" shall be the Final Index Price divided by the Initial Index
Price.
"Initial Index Price" means the sum of the per share closing sales price of
the common stock of each company comprising the Index Group multiplied by the
applicable weighting, as such prices are reported on the consolidated
transaction reporting system for the market or exchange on which such common
stock is principally traded on the trading day immediately preceding the public
announcement of this Agreement.
"Initial FFC Market Value" means the average of the daily closing sales
prices of a share of FFC Common Stock, as reported on NASDAQ, for the twenty
consecutive trading days immediately preceding the public announcement of this
Agreement, adjusted to reflect any stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or similar
transaction by FFC between the date of this Agreement and the Determination
Date.
"FFC Market Value" shall be the average of the daily closing sales prices
of a share of FFC Common Stock as reported on NASDAQ for the twenty consecutive
trading days immediately preceding the Determination Date.
If 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 date of this Agreement and the
Determination Date, the prices for the common stock of such company shall be
appropriately adjusted for the purposes of applying this Section 11.1.11.
11.2 Effect of Termination.
11.2.1 In the event of termination of this Agreement pursuant to any
provision of Section 11.1, this Agreement shall forthwith become void and have
no further force, except that (i) the provisions of Sections 11.2, 12.1, 12.6,
12.9, 12.10, and any other Section which, by its terms, relates to
post-termination rights or obligations, shall survive such termination of this
Agreement and remain in full force and effect.
11.2.2 If this Agreement is terminated, expenses and damages of the parties
hereto shall be determined as follows:
(A) Except as provided below, whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
(B) In the event of a termination of this Agreement because of a willful
breach of any representation, warranty, covenant or agreement contained in this
Agreement, the breaching party shall remain liable for any and all damages,
costs and expenses, including all reasonable attorneys' fees, sustained or
incurred by the non-breaching party as a result thereof or in connection
therewith or with respect to the enforcement of its rights hereunder, except as
provided in Section 11.2.2(F) below.
(C) As a condition of FFC's willingness, and in order to induce FFC to
enter into this Agreement, and to reimburse FFC for incurring the costs and
59
expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement, ALFC hereby agrees to pay FFC, and
FFC shall be entitled to payment of, a fee of $2,500,000 (the "ALFC Fee"),
within three business days after written demand for payment is made by FFC,
following the occurrence of any of the events set forth below:
(i) ALFC terminates this Agreement pursuant to Section 11.1.9 or FFC
terminates this Agreement pursuant to Section 11.1.8; or
(ii) The entering into a definitive agreement by ALFC relating to an
Acquisition Proposal or the consummation of an Acquisition Proposal involving
ALFC within twelve months after the occurrence of any of the following: (i) the
termination of the Agreement by FFC pursuant to Section 11.1.2 or 11.1.3 because
of a willful breach by ALFC or any ALFC Subsidiary; or (ii) the failure of the
stockholders of ALFC to approve this Agreement after the occurrence of an
Acquisition Proposal.
(D) If demand for payment of the ALFC Fee is made pursuant to Section
11.2.2(C) and payment is timely made, then FFC will not have any other rights or
claims against ALFC or the ALFC Subsidiaries, or their respective officers and
directors, under this Agreement, it being agreed that the acceptance of the ALFC
Fee under Section 11.2.2(C) will constitute the sole and exclusive remedy of FFC
against ALFC and the ALFC Subsidiaries and their respective officers and
directors.
(E) As a condition of ALFC's willingness, and in order to induce ALFC to
enter into this Agreement, and to reimburse ALFC for incurring the costs and
expenses related to entering into this Agreement and consummating the
transactions contemplated by this Agreement, FFC hereby agrees to pay ALFC, and
ALFC shall be entitled to payment of, a fee of $1,000,000 (the "FFC Fee"),
within three business days after written demand for payment is made by ALFC,
following the termination of the Agreement by ALFC pursuant to Section 11.1.2 or
11.1.3 because of a willful breach by FFC or any FFC Subsidiary.
(F) If demand for payment of the FFC Fee is made pursuant to Section
11.2.2(E) and payment is timely made, then ALFC will not have any other rights
or claims against FFC or the FFC Subsidiaries, or their respective officers and
directors, under this Agreement, it being agreed that the acceptance of the FFC
fee under Section 11.2.2(E) will constitute the sole and exclusive remedy of
ALFC against FFC and the FFC Subsidiaries and their respective officers and
directors.
11.3 Amendment, Extension and Waiver.
Subject to applicable law, at any time prior to the Effective Time (whether
before or after approval thereof by the stockholders of ALFC), the parties
hereto by action of their respective Boards of Directors, may (a) amend this
Agreement, (b) extend the time for the performance of any of the obligations or
other acts of any other party hereto, (c) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (d) waive compliance with any of the agreements or
conditions contained herein; provided, however, that after any approval of this
Agreement and the transactions contemplated hereby by the stockholders of ALFC,
there may not be, without further approval of such stockholders, any amendment
of this Agreement which reduces the amount or value, or changes the form of, the
Merger Consideration to be delivered to ALFC's stockholders pursuant to this
Agreement. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Any agreement on the part of a
party hereto to any extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party, but such waiver or failure
to insist on strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
60
subsequent or other failure. Any termination of this Agreement pursuant to
Article XI may only be effected upon a vote of a majority of the entire Board of
Directors of the terminating party.
ARTICLE XII
MISCELLANEOUS
12.1 Confidentiality.
Except as specifically set forth herein, FFC and ALFC mutually agree to be
bound by the terms of the confidentiality agreements dated October 28, 2005 and
December 1, 2005 (the "Confidentiality Agreements") previously executed by the
parties hereto, which Confidentiality Agreements are hereby incorporated herein
by reference. The parties hereto agree that such Confidentiality Agreements
shall continue in accordance with their respective terms, notwithstanding the
termination of this Agreement.
12.2 Public Announcements.
ALFC and FFC shall cooperate with each other in the development and
distribution of all news releases and other public disclosures with respect to
this Agreement, and except as may be otherwise required by law, neither ALFC nor
FFC shall issue any news release, or other public announcement or communication
with respect to this Agreement unless such news release or other public
announcement or communication has been mutually agreed upon by the parties
hereto.
12.3 Survival.
All representations, warranties and covenants in this Agreement or in any
instrument delivered pursuant hereto shall expire and be terminated and
extinguished at the Effective Time, except for those covenants and agreements
contained herein which by their terms apply in whole or in part after the
Effective Time.
12.4 Notices.
All notices or other communications hereunder shall be in writing and shall
be deemed given if delivered by receipted hand delivery or mailed by prepaid
registered or certified mail (return receipt requested) or by recognized
overnight courier addressed as follows:
If to ALFC, to: Xxxxx X. Xxxxxxx
President and Chief Executive Officer
Atlantic Liberty Financial Corp.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
With required copies to: Xxxx Xxxxxx
Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax: (000) 000-0000
61
If to FFC, to: Xxxx X. Xxxxx
President and Chief Executive Officer
Flushing Financial Corporation
0000 Xxxxxx Xxxxxx,
Xxxxx X000
Xxxx Xxxxxxx, Xxx Xxxx 00000
Fax: 000-000-0000
With required copies to: Xxxxxxx X. XxXxxxxxxx
Xxxxxxx Xxxxxxxx & Wood LLP
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given: (a) as of the
date delivered by hand; (b) three business days after being delivered to the
U.S. mail, postage prepaid; or (c) one business day after being delivered to the
overnight courier.
12.5 Parties in Interest.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any party hereto without the prior written
consent of the other party, and that (except as provided in Article III and
Section 7.8 of this Agreement) nothing in this Agreement is intended to confer
upon any other person any rights or remedies under or by reason of this
Agreement.
12.6 Complete Agreement.
This Agreement, including the Exhibits and Disclosure Schedules hereto and
the documents and other writings referred to herein or therein or delivered
pursuant hereto, together with the Confidentiality Agreements referred to in
Section 12.1, contains the entire agreement and understanding of the parties
with respect to its subject matter. There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties other than
those expressly set forth herein or therein. This Agreement supersedes all prior
agreements and understandings (other, than the Confidentiality Agreements
referred to in Section 12.1 hereof) between the parties, both written and oral,
with respect to its subject matter.
12.7 Counterparts.
This Agreement may be executed in one or more counterparts all of which
shall be considered one and the same agreement and each of which shall be deemed
an original.
12.8 Severability.
In the event that any one or more provisions of this Agreement shall for
any reason be held invalid, illegal or unenforceable in any respect, by any
62
court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement and the parties shall
use their reasonable efforts to substitute a valid, legal and enforceable
provision which, insofar as practical, implements the purposes and intents of
this Agreement.
12.9 Governing Law.
This Agreement shall be governed by the laws of the State of New York,
without giving effect to its principles of conflicts of laws.
12.10 Interpretation.
When a reference is made in this Agreement to Sections or Exhibits, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. The recitals hereto constitute an integral part of this Agreement.
References to Sections include subsections, which are part of the related
Section (e.g., a section numbered "Section 5.5.1" would be part of "Section 5.5"
and references to "Section 5.5" would also refer to material contained in the
subsection described as "Section 5.5.1"). The table of contents, index and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The phrases
"the date of this Agreement", "the date hereof" and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to the date set
forth in the Recitals to this Agreement.
12.11 Specific Performance.
The parties hereto agree that irreparable damage would occur in the event
that the provisions contained in this Agreement were not performed in accordance
with its specific terms or were 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.
63
IN WITNESS WHEREOF, FFC and ALFC have caused this Agreement to be executed
under seal by their duly authorized officers as of the date first set forth
above.
FlUSHING FINANCIAL CORPORATION
By: /s/ Xxxx X. Xxxxx
----------------------------------------
Name: Xxxx X. Xxxxx
Title: President and Chief Executive Officer
ATLANTIC LIBERTY FINANCIAL CORP.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
64
