AGREEMENT AND PLAN OF MERGER BY AND BETWEEN ALLIANCE FINANCIAL CORPORATION AND BRIDGE STREET FINANCIAL, INC. April 23, 2006
AGREEMENT
AND PLAN OF MERGER
BY
AND BETWEEN
ALLIANCE
FINANCIAL CORPORATION
AND
BRIDGE
STREET FINANCIAL, INC.
April
23, 2006
TABLE
OF CONTENTS
ARTICLE
I Certain Definitions
|
|
1.1
|
Certain
Definitions.
|
ARTICLE
II The Merger
|
|
2.1
|
Merger.
|
2.2
|
Closing;
Effective Time.
|
2.3
|
Certificate
of Incorporation and Bylaws.
|
2.4
|
Directors
and Officers of Surviving Corporation.
|
2.5
|
Effects
of the Merger.
|
2.6
|
Tax
Consequences.
|
2.7
|
Possible
Alternative Structures.
|
2.8
|
Additional
Actions.
|
ARTICLE
III Conversion of Shares
|
|
3.1
|
Conversion
of BSFI Common Stock; Merger Consideration.
|
3.2
|
Election
Procedures.
|
3.3
|
Procedures
for Exchange of BSFI Common Stock.
|
3.4
|
Treatment
of BSFI Options.
|
3.5
|
|
3.6
|
Reservation
of Shares.
|
ARTICLE
IV Representations and Warranties of BSFI
|
|
4.1
|
Standard.
|
4.2
|
Organization.
|
4.3
|
Capitalization.
|
4.4
|
Authority;
No Violation.
|
4.5
|
Consents.
|
4.6
|
Financial
Statements.
|
4.7
|
Taxes.
|
4.8
|
No
Material Adverse Effect.
|
4.9
|
|
4.10
|
Ownership
of Property; Insurance Coverage.
|
4.11
|
|
4.12
|
|
4.13
|
|
4.14
|
|
4.15
|
Environmental
Matters.
|
4.16
|
Loan
Portfolio.
|
4.17
|
Related
Party Transactions.
|
4.18
|
Deposits.
|
4.19
|
Board
Approval.
|
4.20
|
Registration
Obligations.
|
4.21
|
Risk
Management Instruments.
|
4.22
|
Fairness
Opinion.
|
4.23
|
Intellectual
Property.
|
4.24
|
Duties
as Fiduciary.
|
4.25
|
Employees;
Labor Matters.
|
4.26
|
|
4.27
|
Securities
Documents.
|
4.28
|
Internal
Controls.
|
4.29
|
Bank
Owned Life Insurance.
|
4.30
|
American
Jobs Creation Act.
|
4.31
|
Xxxx’x
Agency, Inc.
|
ARTICLE
V Representations and Warranties of AFC
|
|
5.1
|
Standard.
|
5.2
|
Organization.
|
5.3
|
Capitalization.
|
5.4
|
Authority;
No Violation.
|
5.5
|
Consents.
|
5.6
|
Financial
Statements.
|
5.7
|
Taxes.
|
5.8
|
No
Material Adverse Effect.
|
5.9
|
|
5.10
|
Ownership
of Property; Insurance Coverage.
|
5.11
|
Legal
Proceedings.
|
5.12
|
|
5.13
|
Employee
Benefit Plans.
|
5.14
|
|
5.15
|
Environmental
Matters.
|
5.16
|
Intellectual
Property.
|
5.17
|
Duties
as Fiduciary.
|
5.18
|
Employees;
Labor Matters.
|
5.19
|
|
5.20
|
|
5.21
|
Internal
Controls.
|
5.22
|
American
Jobs Creation Act.
|
5.23
|
AFC
Common Stock.
|
6.1
|
Conduct
of Business.
|
6.2
|
Current
Information.
|
6.3
|
Access
to Properties and Records.
|
6.4
|
Financial
and Other Statements.
|
6.5
|
Maintenance
of Insurance.
|
6.6
|
Disclosure
Supplements.
|
6.7
|
Consents
and Approvals of Third Parties.
|
6.8
|
All
Reasonable Efforts.
|
6.9
|
Failure
to Fulfill Conditions.
|
6.10
|
No
Solicitation.
|
6.11
|
Reserves
and Merger-Related Costs.
|
6.12
|
Board
of Directors and Committee Meetings.
|
6.13
|
Transaction
Expenses of BSFI.
|
6.14
|
Stock
Repurchase Plan; ESOP Loan.
|
ARTICLE
VII Covenants of AFC
|
|
7.1
|
Conduct
of Business.
|
7.2
|
Current
Information and Consultation.
|
7.3
|
Financial
and Other Statements.
|
7.4
|
Maintenance
of Insurance.
|
7.5
|
Disclosure
Supplements.
|
7.6
|
Consents
and Approvals of Third Parties.
|
7.7
|
All
Reasonable Efforts.
|
7.8
|
Failure
to Fulfill Conditions.
|
7.9
|
Employee
Benefits.
|
7.10
|
Directors
and Officers Indemnification and Insurance.
|
7.11
|
Stock
Listing.
|
7.12
|
Reservation
of Stock.
|
7.13
|
Communications
to BSFI Employees; Training
|
7.14
|
Changes
in Capitalization
|
ARTICLE
VIII Regulatory and Other Matters
|
|
8.1
|
|
8.2
|
Proxy
Statement-Prospectus; Merger Registration Statement.
|
8.3
|
Regulatory
Approvals.
|
8.4
|
Affiliates.
|
ARTICLE
IX Closing Conditions
|
|
9.1
|
Conditions
to Each Party’s Obligations under this Agreement.
|
9.2
|
Conditions
to the Obligations of AFC under this Agreement.
|
9.3
|
Conditions
to the Obligations of BSFI under this Agreement.
|
ARTICLE
X The Closing
|
|
10.1
|
Time
and Place.
|
10.2
|
Deliveries
at the Pre-Closing and the Closing.
|
ARTICLE
XI Termination, Amendment and Waiver
|
|
11.1
|
Termination.
|
11.2
|
Effect
of Termination.
|
11.3
|
Amendment,
Extension and Waiver.
|
ARTICLE
XII Miscellaneous
|
|
12.1
|
Confidentiality.
|
12.2
|
Public
Announcements.
|
12.3
|
Survival.
|
12.4
|
Notices.
|
12.5
|
Parties
in Interest.
|
12.6
|
Complete
Agreement.
|
12.7
|
|
12.8
|
Severability.
|
12.9
|
Governing
Law.
|
12.10
|
|
12.11
|
Specific
Performance.
|
12.12
|
Waiver
of Trial by Jury.
|
AGREEMENT
AND PLAN OF MERGER
This
AGREEMENT AND PLAN OF MERGER (this “Agreement”)
is
dated as of April 23, 2006 by and between Alliance Financial Corporation, a
New York corporation (“AFC”),
and
Bridge Street Financial, Inc., a Delaware corporation (“BSFI”).
1. The
Board
of Directors of each of AFC and BSFI (i) has determined that this Agreement
and the business combination and related transactions contemplated hereby are
in
the best interests of their respective companies and shareholders and
(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.
2. In
accordance with the terms of this Agreement, BSFI will merge with and into
AFC
(the “Merger”),
and
it is anticipated that immediately thereafter Oswego County National Bank,
which
is a wholly owned subsidiary of BSFI, will be merged with and into Alliance
Bank, a wholly owned subsidiary of AFC.
3. As
a
condition to the willingness of AFC to enter into this Agreement, each of the
directors and executive officers of BSFI has entered into a Voting Agreement,
substantially in the form of Exhibit A hereto, dated as of the date hereof,
with AFC (the “Voting
Agreement”),
pursuant to which each such director has agreed, among other things, to vote
all
shares of BSFI Common Stock (as defined herein) 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.
4. 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
that this Agreement be and is hereby adopted as a “plan of reorganization”
within the meaning of Sections 354 and 361 of the Code.
5. 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.
6. 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).
“Acquisition
Proposal”
shall
have the meaning set forth in Section 6.10.
“AFC”
shall
mean Alliance Financial Corporation, a New York corporation, with its principal
executive offices located at 000 Xxxxxxx Xxxxxx, Xxxxx XX,
00xx
Xxxxx,
Xxxxxxxx, Xxx Xxxx 00000.
“AFC
Benefit Plans”
shall
mean those plans described on AFC Disclosure Schedule 5.13.1.
“AFC
Common Stock”
shall
mean the common stock, par value $1.00 per share, of AFC.
“AFC
Disclosure Schedule”
shall
mean a written disclosure schedule delivered by AFC to BSFI specifically
referring to the appropriate section of this Agreement.
“AFC
Financial Statements”
shall
mean the (i) the audited consolidated statements of condition (including
related notes and schedules) of AFC as of December 31, 2005 and 2004 and
the consolidated statements of income, comprehensive income, changes in
shareholders’ equity and cash flows (including related notes and schedules, if
any) of AFC for each of the three years ended December 31, 2005, as set
forth in AFC’s annual report on Form 10-K for the year ended
December 31, 2005, and (ii) the unaudited interim consolidated
financial statements of AFC as of the end of each calendar quarter following
December 31, 2005, and for the periods then ended, as filed by AFC in its
Securities Documents.
“AFC
Loan Participation”
shall
have the meaning set forth in Section 5.15.2.
“AFC
Loan Property”
shall
have the meaning set forth in 5.15.2.
“AFC
Preferred Stock”
shall
have the meaning set forth in Section 5.3.1.
“AFC
Regulatory Reports”
means
the Call Reports of Alliance Bank, and accompanying schedules (other than such
schedules as are required to be kept confidential pursuant to applicable law
or
regulatory requirements), filed or to be filed with the FDIC with respect to
each calendar quarter beginning with the quarter ended March 31, 2006,
through the Closing Date, and all Annual Reports on Form FR Y-6 and any
Current Report on Form FR Y-6 filed with the FRB by BSFI from
December 31, 2005 through the Closing Date.
“AFC
SEC Reports” shall
have the meaning set forth in Section 5.20.
“AFC
Shareholder Rights Plan”
means
that certain Rights Agreement dated October 19, 2001 between AFC and
American Stock Transfer & Trust Company, including the exhibits
thereto.
“AFC
Shareholders Meeting”
shall
have the meaning set forth in Section 8.1.2.
“AFC
Subsidiary”
means
any corporation, 20% or more of the capital stock of which is owned, either
directly or indirectly, by AFC or Alliance Bank, except any corporation the
stock of which is held in the ordinary course of the lending activities of
Alliance Bank.
“AFC
Stock”
shall
have the meaning set forth in Section 5.3.1.
“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, the exhibits and schedules hereto and any amendment
hereto.
“Alliance
Bank”
shall
mean Alliance Bank, N.A. a national banking association with its principal
offices located at 000 Xxxxxxx Xxxxxx, Tower II, 18th
Floor,
Syracuse, New York 13202, which is a wholly owned subsidiary of
AFC.
“Bank
Merger”
shall
mean the merger of Oswego County National Bank with and into Alliance Bank,
with
Alliance Bank as the surviving institution.
“Bank
Regulator”
shall
mean any Federal or state banking regulator, including but not limited to the
OCC, FDIC and the FRB, which regulates or has the statutory authority to
regulate, even if only for a moment in time, Alliance Bank, Oswego County
National Bank, and their respective holding companies and subsidiaries, as
the
case may be.
“Benefit
Plan Determination Date”
shall
have the meaning set forth in Section 7.9.1.
“BHCA”
shall
mean the Bank Holding Company Act of 1956, as amended.
“BSFI”
shall
mean Bridge Street Financial, Inc., a Delaware corporation with its principal
office located at 000 Xxxxx Xxxxx 000, Xxxxxx, Xxx Xxxx 00000.
“BSFI
Benefit Plans”
shall
have the meaning set forth in Section 4.13.1.
“BSFI
Common Stock”
shall
mean the common shares, par value $0.01 per share, of BSFI.
“BSFI
Disclosure Schedule”
shall
mean the collective written disclosure schedules delivered by BSFI to AFC
pursuant hereto, and specifically referring to the appropriate section of this
Agreement to which such schedule relates.
“BSFI
ESOP”
shall
mean the Employee Stock Ownership Plan of Oswego County Bancorp, Inc. or any
successor thereto.
“BSFI
Expenses”
shall
have the meaning set forth in Section 6.13.
“BSFI
Financial Statements”
shall
mean (i) the audited consolidated statements of financial condition
(including related notes and schedules) of BSFI as of December 31, 2005 and
2004 and the related consolidated statements of income, changes in shareholders’
equity and cash flows (including related notes and schedules, if any) of BSFI
for each of the three years ended December 31, 2005, as incorporated by
reference in BSFI’s annual report on Form 10-K for the year ended
December 31, 2005 from BSFI’s annual report to stockholders for such year
and (ii) the unaudited interim consolidated financial statements of BSFI as
of the end of each calendar quarter following December 31, 2005, and for
the periods then ended, as filed by BSFI in its Securities
Documents.
“BSFI
Loan Participation”
shall
have the meaning set forth in Section 4.15.2.
“BSFI
Loan Property”
shall
have the meaning set forth in Section 4.15.2.
“BSFI
Option”
shall
mean an option to purchase shares of BSFI Common Stock granted pursuant to
the
BSFI Stock Option Plans and the outstanding option agreements, and outstanding
as of the date hereof, as set forth in BSFI Disclosure
Schedule 3.4.
“BSFI
Preferred Stock”
shall
have the meaning set forth in Section 4.3.1.
“BSFI
Regulatory Reports”
means
the Call Reports of Oswego County National Bank, and accompanying schedules
(other than such schedules as are required to be kept confidential pursuant
to
applicable law or regulatory requirements), filed or to be filed with the FDIC
with respect to each calendar quarter beginning with the quarter ended
March 31, 2006, through the Closing Date, and all Annual Reports on
Form FR Y-6 and any Current Report on Form FR Y-6 filed with the FRB
by BSFI from December 31, 2005 through the Closing Date.
“BSFI
Restricted Stock”
means
the shares of restricted stock of BSFI issued pursuant to the Bridge Street
Financial, Inc. 2003 Recognition and Retention Plan and the Oswego County
Bancorp, Inc. Restricted Stock Plan.
“BSFI
Restricted Stock Plans”
shall
mean the restricted stock plans maintained by BSFI for the benefit of the
employees of Oswego County National Bank pursuant to which shares of BSFI
Restricted Stock may be issued.
“BSFI
Stock”
shall
have the meaning set forth in Section 4.3.1.
“BSFI
Stockholders Meeting”
shall
have the meaning set forth in Section 8.1.1.
“BSFI
Stock Option Plans”
shall
mean the Bridge Street Financial, Inc. 2003 Stock Option Plan and the Oswego
County Bancorp, Inc. Stock Option Plan.
“BSFI
Subsidiary”
means
any corporation, 10% or more of the capital stock of which is owned, either
directly or indirectly, by BSFI, Oswego County National Bank or Xxxx’x Agency,
Inc., a New York corporation, except any corporation the stock of which is
held
in the ordinary course of the lending activities of Oswego County National
Bank.
“Certificate”
shall
mean a certificate or book entry evidencing shares of BSFI Common
Stock.
“Claim”
shall
have the meaning set forth in Section 7.10.2.
“Closing
Date”
shall
have the meaning set forth in Section 2.2.
“Code”
shall
mean the Internal Revenue Code of 1986, as amended.
“Confidentiality
Agreements”
shall
mean those confidentiality agreements dated as of January 27, 2006 and
April 10, 2006 between AFC and BSFI.
“CRA”
shall
have the meaning set forth in Section 4.12.1.
“Current
BSFI Employees”
shall
have the meaning set forth in Section 7.9.2.
“Determination
Date”
shall
have the meaning set forth in Section 11.1.9.
“DGCL”
shall
mean the Delaware General Corporation Law.
“Dissenting
Shares”
shall
have the meaning set forth in Section 3.1.6.
“Dissenting
Shareholder”
shall
have the meaning set forth in Section 3.1.6.
“Effective
Time”
shall
mean the date and time specified pursuant to Section 2.2 as the effective
time of the Merger.
“Environmental
Laws”
shall
mean any applicable federal, state or local law, statute, ordinance, rule,
regulation, code, license, permit, 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 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. § 9601, et seq; the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. § 6901, et
seq; the Clean Air Act, as amended, 42 U.S.C. § 7401, et seq; the Federal
Water Pollution Control Act, as amended, 33 U.S.C. § 1251, et seq; the
Toxic Substances Control Act, as amended, 15 U.S.C. § 2601, et seq; the
Emergency Planning and Community Right to Xxxx Xxx, 00 X.X.X. § 00000, et
seq; the Safe Drinking Water Act, 42 U.S.C. § 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 as in effect on or prior
to
the date of this Agreement.
“ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
“ERISA
Affiliate”
means,
with respect to any Person, any other Person that, together with such Person,
would be treated as a single employer under Section 414 of the Code or
Section 4001 of ERISA.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended.
“Exchange
Agent”
shall
mean American Stock Transfer and Trust Company, or such other bank or trust
company or other agent as mutually agreed upon by AFC and BSFI, which shall
act
as agent for AFC 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.
“FHLB”
shall
mean the Federal Home Loan Bank of New York or any successor
thereto.
“FRB”
shall
mean the Board of Governors of the Federal Reserve System, or any designee
thereof or successor thereto.
“GAAP”
shall
mean accounting principles generally accepted in the United States of America
applied on a consistent basis.
“Governmental
Entity”
shall
mean any Federal or state court, administrative agency or commission or other
governmental authority or instrumentality.
“Indemnified
Liabilities”
shall
have the meaning set forth in Section 7.10.2.
“Indemnified
Parties”
shall
have the meaning set forth in Section 7.10.2.
“Insurance
Regulator”
shall
mean the New York State Insurance Department and any other Governmental Entity
which has authority to regulate a New York insurance agency.
“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 officers and
directors of such Person after reasonable inquiry, and includes any facts,
matters or circumstances set forth in any written notice from any Bank Regulator
or any other written notice received by an officer or director of that
Person.
“Xxxx’x”
shall
have the meaning set forth in Section 4.31.1.
“Material
Adverse Effect”
shall
mean, with respect to AFC or BSFI, respectively, any effect that (i) is material
and adverse to the financial condition, results of operations or business of
AFC
and its Subsidiaries taken as a whole, or BSFI and its Subsidiaries taken as
a
whole, respectively, or (ii) materially impairs the ability of either BSFI,
on
the one hand, or AFC, on the other hand, to perform its obligations under this
Agreement or otherwise materially impedes the consummation of the transactions
contemplated by this Agreement; provided, however, that in determining whether
a
Material Adverse Effect has occurred, there shall be excluded any effect the
cause of which is (i) any change after the date of this Agreement in (x) laws,
rules or regulations of general applicability or published interpretations
thereof by courts or governmental authorities, (y) GAAP or (z) regulatory
accounting requirements, in any such case applicable to banks or their holding
companies generally and not specifically relating to BSFI or any of its
Subsidiaries, on the one hand, or AFC or any of its Subsidiaries, on the other
hand, (ii) the announcement of this Agreement or any action or omission of
BSFI
or any BSFI Subsidiary on the one hand, or AFC or any of its Subsidiaries,
on
the other hand, required under this Agreement or taken or omitted to be taken
with the express written permission of AFC or BSFI, respectively, (iii) any
changes after the date of this Agreement in general economic or capital market
conditions affecting banks or their holding companies generally, or (iv) changes
or events, after the date hereof, affecting the financial services industry
generally and not specifically relating to BSFI or its Subsidiaries, on the
one
hand, or AFC or any of its Subsidiaries, on the other hand, provided that a
decrease in the trading or market prices of the BSFI Common Stock or AFC Common
Stock shall not be considered, by itself, to constitute a Material Adverse
Effect.
“Materials
of Environmental Concern”
means
pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products, and any other materials regulated under Environmental
Laws.
“Maximum
Amount”
shall
have the meaning set forth in Section 7.10.1.
“Merger”
shall
mean the merger of BSFI with and into AFC pursuant to the terms
hereof.
“Merger
Consideration”
shall
mean the cash or AFC Common Stock, or combination thereof, in an aggregate
per
share amount to be paid by AFC for each share of BSFI 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 the offer of shares
of AFC Common Stock to be offered to holders of BSFI Common Stock in connection
with the Merger.
“Non-qualified
Deferred Compensation Plan”
shall
have the meaning set forth in Section 4.13.1.
“NYBCL”
shall
mean the New York Business Corporation Law.
“Observer”
shall
have the meaning set forth in Section 6.12.
“OCC”
shall
mean the Office of the Comptroller of the Currency, any district office thereof,
or any successor thereto.
“Oswego
County National Bank”
shall
mean Oswego County National Bank, a national banking association, with its
principal office located at 000 Xxxxx Xxxxx 000, Xxxxxx, Xxx Xxxx
00000, and which is a wholly owned subsidiary of BSFI.
“PBGC”
shall
mean the Pension Benefit Guaranty Corporation or any successor
thereto.
“Person”
shall
mean any individual, corporation, partnership, joint venture, association,
trust
or “group” (as that term is defined under the Exchange Act).
“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 or Insurance 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 puts, calls, warrants, options, conversion, redemption, repurchase or
other
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.
“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 3.2.6.
“Stock
Election Number”
shall
have the meaning set forth in Section 3.2.5.
“Stock
Conversion Number”
shall
have the meaning set forth in Section 3.2.1.
“Subsidiary”
means
any corporation, 10% or more of the capital stock of which is owned, either
directly or indirectly, except any corporation the stock of which is held in
the
ordinary course of the lending activities, of either Alliance Bank or Oswego
County National Bank, as applicable.
“Superior
Proposal”
shall
have the meaning set forth in Section 6.10.
“Surviving
Corporation”
shall
have the meaning set forth in Section 2.1.
“Tax”
shall
mean any federal, state, local, foreign or provincial income, gross receipts,
property, sales, service, use, license, lease, excise, franchise, employment,
payroll, withholding, employment, unemployment insurance, workers’ compensation,
social security, alternative or added minimum, ad valorem, value added, stamp,
business license, occupation, premium, environmental, windfall profit, customs,
duties, estimated, transfer or excise tax, or any other tax, custom, duty,
premium, governmental fee or other assessment or charge of any kind whatsoever,
together with any interest, penalty or additional tax imposed by any
Governmental Entity.
“Termination
Date”
shall
mean January 31, 2007.
“Termination
Fee”
shall
have the meaning set forth in Section 11.2.2(C).
“Treasury
Stock”
shall
have the meaning set forth in Section 3.1.2.
“Voting
Agreement”
shall
have the meaning set forth in the recitals.
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) BSFI shall merge with and into AFC, with AFC as the resulting or
surviving corporation (the “Surviving
Corporation”);
and
(b) the separate existence of BSFI shall cease and all of the rights,
privileges, powers, franchises, properties, assets, liabilities and obligations
of BSFI shall be vested in and assumed by AFC. As part of the Merger, each
outstanding share of BSFI Common Stock will be converted into the right to
receive the Merger Consideration pursuant to the terms of
Article III.
2.2 |
Closing;
Effective Time.
|
The
Merger shall be effected by the filing of a certificate of merger with the
New
York Department of State and the Delaware Department of State on the day of
the
Closing (the “Closing
Date”),
in
accordance with the NYBCL and DGCL, respectively. The “Effective
Time”
means
the date and time upon which the certificate of merger is filed with the New
York Department of State and the Delaware Department of State, or as otherwise
stated in the certificate of merger, in accordance with the NYBCL and DGCL,
respectively.
2.3 |
Certificate
of Incorporation and Bylaws.
|
The
Certificate of Incorporation and Bylaws of AFC 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.
|
Until
changed in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation, the officers and directors of AFC immediately prior
to
the Effective Time shall be the officers of Surviving Corporation, in each
case
until their respective successors are duly elected or appointed and qualified.
At the Effective Time, the number of persons constituting the Board of Directors
of AFC and Alliance Bank shall be increased by two members, and Xxxxxxx Xxxxxxx
and a second individual to be selected by AFC in accordance with the procedure
set forth in the letter of intent dated as of April 4, 2006 (each a
“New
Member”
and
collectively, the “New
Members”)
shall
be appointed to the AFC Board and Alliance Bank Board in each case with a term
of office expiring at the next annual meeting of stockholders of AFC to be
held
following the Effective Time; provided,
however,
that
AFC and Alliance Bank shall not have any obligation to appoint any New Member
to
serve on AFC’s or Alliance Bank’s Board if such person is not a member of either
the BSFI or the Oswego County National Bank Board of Directors immediately
prior
to the Effective Time. BSFI will submit a list of proposed directors for
consideration by the Governance Committee of AFC. It is intended that this
individual will qualify as an “independent director” under applicable Securities
Laws and NASDAQ listing standards and will be a resident and business leader
in
Oswego County.
2.5 |
Effects
of the Merger.
|
At
and
after the Effective Time, the Merger shall have the effects as set forth in
the
NYBCL.
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 would reasonably be expected to prevent the Merger from
qualifying as a reorganization under Section 368(a) of the Code. Following
the Closing, neither AFC nor any of its 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 would reasonably
be
expected to cause the Merger to fail to qualify as a reorganization under
Section 368(a) of the Code. Each of AFC and BSFI hereby agrees to deliver a
certificate substantially in compliance with IRS published advance ruling
guidelines, with customary exceptions and modifications thereto, to enable
BSFI’s counsel to deliver the legal opinion contemplated by Section 9.1.6,
which certificate shall be dated as of the date of such opinion and shall be
true and correct as of such date.
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 and the prior written
consent of BSFI, which consent shall not be unreasonably withheld or delayed,
prior to the Effective Time AFC may revise the structure for effecting the
Merger described in Section 2.1 or the Bank Merger including, without
limitation, by substituting a wholly owned subsidiary for AFC or Alliance Bank,
as applicable, provided that (i) any such subsidiary shall become a party
to, and shall agree to be bound by, the terms of this Agreement; (ii) there
are no adverse Federal or state income tax consequences to BSFI stockholders,
and nothing would prevent the rendering of the opinion contemplated in
Section 9.1.6, as a result of the modification; (iii) the
consideration to be paid to the holders of BSFI Common Stock under this
Agreement is not thereby changed in kind, value or reduced in amount; and
(iv) such modification will not delay materially or jeopardize receipt of
any Regulatory Approvals or other consents and approvals relating to the
consummation of the Merger or otherwise cause any condition to Closing set
forth
in Article IX 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, AFC shall consider or be advised that any
further deeds, documents, assignments or assurances in law or any other acts
are
necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in AFC its right, title or interest in, to or under any of the
rights, properties or assets of BSFI or any BSFI Subsidiary, or
(ii) otherwise carry out the purposes of this Agreement, BSFI and its
officers and directors shall be deemed to have granted to AFC an irrevocable
power of attorney to execute and deliver, in such official corporate capacities,
all such deeds, assignments or assurances in law or any other acts as are
necessary or desirable to (a) vest, perfect or confirm, of record or
otherwise, in AFC its right, title or interest in, to or under any of the
rights, properties or assets of BSFI or (b) otherwise carry out the
purposes of this Agreement, and the officers and directors of the AFC are
authorized in the name of BSFI or otherwise to take any and all such
action.
ARTICLE
III
CONVERSION
OF SHARES
3.1 |
Conversion
of BSFI Common Stock; Merger
Consideration.
|
At
the
Effective Time, by virtue of the Merger and without any action on the part
of
AFC, BSFI or the holders of any of the shares of BSFI Common Stock, the Merger
shall be effected in accordance with the following terms:
3.1.1 Each
share of AFC 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 BSFI Common Stock held in the treasury of BSFI and each share of
BSFI
Common Stock owned by AFC prior to the Effective Time (other than shares held
in
a fiduciary capacity or in connection with debts previously contracted) and
each
share of BSFI Common Stock held in a trust under the BSFI Restricted Stock
Plans
but not subject to an award of BSFI Restricted Stock (“Treasury
Stock”),
shall, at the Effective Time, cease to exist, and such shares, including any
Certificates therefor, shall be canceled as promptly as practicable thereafter,
and no payment or distribution shall be made in consideration
therefor.
3.1.3 Each
outstanding share of BSFI Common Stock with respect to which an election to
receive AFC Common Stock has been effectively made and not revoked or lost,
pursuant to Section 3.2.3 (a “Stock
Election”),
shall
be converted into the right to receive 0.7547 (the “Exchange
Ratio”)
shares
of AFC Common Stock, subject to adjustment as provided in Section 3.1.9
(the “Stock
Consideration”)
(collectively, the “Stock
Election Shares”).
3.1.4 Each
outstanding share of BSFI Common Stock with respect to which an election to
receive cash has been effectively made and not revoked or lost, pursuant to
Section 3.2.3 (a “Cash
Election”),
shall
be converted into the right to receive a cash payment, without interest, equal
to $23.06 (the “Cash
Consideration”)
(collectively, the “Cash
Election Shares”).
3.1.5 For
each
outstanding share of BSFI Common Stock other than as to which a Cash Election
or
a Stock Election has been effectively made and not revoked or lost, pursuant
to
Section 3.2.3 (collectively, “Non-Election
Shares”),
the
right to receive from AFC such Stock Consideration and/or Cash Consideration
as
is determined in accordance with Section 3.2.
3.1.6 Each
outstanding share of BSFI Common Stock, the holder of which has perfected his
right to dissent under applicable law 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 applicable law. BSFI shall give AFC immediate notice upon receipt
by
BSFI of any such demands for payment of the fair value of such shares of BSFI
Common Stock and of withdrawals of such notice and any other related
communications (any shareholder duly making such demand being hereinafter called
a “Dissenting
Shareholder”),
and
AFC shall have the right to participate in all discussions, negotiations and
proceedings with respect to any such demands. BSFI shall not, except with the
prior written consent of AFC, 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 Shareholder as may be necessary to perfect appraisal rights
under applicable law. Any payments made in respect of Dissenting Shares shall
be
made by the Surviving Company.
3.1.7 If
any
Dissenting Shareholder withdraws or loses (through failure to perfect or
otherwise) his right to such payment at or prior to the Effective Time, such
holder’s shares of BSFI 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 withdraws or loses (through failure to perfect or
otherwise) his right to such payment after the Effective Time, each share of
BSFI Common Stock of such holder shall be entitled to receive the Merger
Consideration.
3.1.8 Upon
the
Effective Time, outstanding shares of BSFI 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 3.1 represent only the right
to receive the Merger Consideration and any dividends or distributions with
respect thereto or any dividends or distributions with a record date prior
to
the Effective Time that were declared or made by BSFI on such shares of BSFI
Common Stock in accordance with the terms of this Agreement on or prior to
the
Effective Time and which remain unpaid at the Effective Time.
3.1.9 No
Fractional Shares.
Notwithstanding anything to the contrary contained herein, no certificates
or
scrip representing fractional shares of AFC Common Stock shall be issued upon
the surrender for exchange of Certificates, no dividend or distribution with
respect to AFC Common Stock shall be payable on or with respect to any
fractional share interests, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a shareholder of
AFC. In lieu of the issuance of any such fractional share, AFC shall pay to
each
former holder of BSFI Common Stock who otherwise would be entitled to receive
a
fractional share of AFC 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 AFC Common Stock as
reported on the NASDAQ National Market for the five consecutive trading days
immediately preceding the Closing Date. For purposes of determining any
fractional share interest, all shares of BSFI Common Stock owned by a BSFI
shareholder shall be combined so as to calculate the maximum number of whole
shares of AFC Common Stock issuable to such BSFI shareholder.
3.2 |
Election
Procedures.
|
3.2.1 Holders
of BSFI Common Stock may elect to receive shares of AFC Common Stock or cash
in
exchange for their shares of BSFI Common Stock. The total number of shares
of
BSFI Common Stock to be converted into Stock Consideration pursuant to this
Section 3.2.1 shall be equal to the product obtained by multiplying
(x) the number of shares of BSFI Common Stock outstanding immediately prior
to the Effective Time by (y) 0.75 (the
“Stock
Conversion Number”).
All
other shares of BSFI Common Stock shall be converted into Cash
Consideration.
3.2.2 An
election form and other appropriate customary transmittal material in such
form
as AFC and BSFI shall mutually agree (“Election
Form”),
will
be mailed no more than forty (40) business days and no less than twenty (20)
business days prior to the anticipated Effective Time or on such earlier date
as
AFC and BSFI shall mutually agree (the “Mailing
Date”)
or if a
later date is agreed upon by AFC and BSFI no later than five (5) business days
prior to the Mailing Date, to each holder of record of BSFI Common Stock
entitled to vote at the BSFI Stockholders Meeting (as defined in
Section 8.1.1) permitting such holder, subject to the allocation and
election procedures set forth in this Section 3.2, (i) to specify the
number of shares of BSFI Common Stock owned by such holder with respect to
which
such holder desires to make a Cash Election in accordance with the provision
of
Section 3.1.4, (ii) to specify the number of shares of BSFI Common
Stock owned by such holder with respect to which such holder desires to make
a
Stock Election, in accordance with the provision of Section 3.1.3, or
(iii) to indicate that such record holder has no preference as to the
receipt of cash or AFC Common Stock for such shares (a “Non-Election”).
Holders of record of shares of BSFI Common Stock who hold such shares as
nominees, trustees or in other representative capacities (a “Representative”)
may
submit multiple Election Forms, provided that each such Election Form covers
all
the shares of BSFI Common Stock held by each Representative for a particular
beneficial owner. Any shares of BSFI Common Stock with respect to which the
holder thereof shall not, as of the Election Deadline (as defined in
Section 3.2.3), have made an election by submission to the Exchange Agent
of an effective, properly completed Election Form shall be deemed Non-Election
Shares. Any 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 AFC Common Stock. AFC shall make available one or
more Election Forms as may reasonably be requested in writing from time to
time
by all persons who become holders (or beneficial owners) of BSFI Common Stock
between the BSFI Stockholders Meeting record date and the close of business
on
the business day prior to the Election Deadline (as defined in
Section 3.2.3), and BSFI shall provide to the Exchange Agent all
information reasonably necessary for it to perform as specified
herein.
3.2.3 The
term
“Election
Deadline”,
as
used below, shall mean 5:00 p.m., Eastern time, on the 30th calendar day
following the date the Election Form is first mailed. 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. 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 Deadline. The Certificate or Certificates relating to any revoked
Election Form shall 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
whether any election, revocation or change has been properly or timely made
and
to disregard immaterial defects in the Election Forms, and any good faith
decisions of the Exchange Agent regarding such matters shall be binding and
conclusive. Neither AFC or the Exchange Agent shall be under any obligation
to
notify any person of any defect in an Election Form.
3.2.4 No
later
than three (3) business days after the Effective Time, AFC shall cause the
Exchange Agent to effect the allocation among holders of BSFI Common Stock
of
rights to receive the Cash Consideration and the Stock Consideration as set
forth in Sections 3.2.5 and 3.2.6.
3.2.5 If
the
aggregate number of shares of BSFI Common Stock with respect to which Stock
Elections shall have been made (the “Stock
Election Number”)
exceeds the Stock Conversion Number, then all Cash Election Shares and all
Non-Election Shares of each holder thereof shall be converted into the right
to
receive the Cash Consideration, and Stock Election Shares of each holder thereof
will be converted into the right to receive the Stock Consideration in respect
of that number of Stock Election Shares equal to the product obtained by
multiplying (x) the number of Stock Election Shares held by such holder by
(y) the 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 holders’ Stock Election Shares being converted into the right to receive
the Cash Consideration.
3.2.6 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 the Non-Election Shares of each holder thereof shall
convert into the right to receive the Stock Consideration in respect of that
number of Non-Election Shares 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 Cash Election Shares of each holder thereof shall convert
into
the right to receive the Stock Consideration in respect of that number of Cash
Election Shares 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.
3.3 |
Procedures
for Exchange of BSFI Common
Stock.
|
3.3.1 AFC
to Make Merger Consideration Available.
Promptly after the Effective Time, AFC shall deposit, or shall cause to be
deposited, with the Exchange Agent for the benefit of the holders of BSFI Common
Stock, for exchange in accordance with this Section 3.3, 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 BSFI Common Stock) and shall instruct the Exchange
Agent to issue such cash and shares of AFC Common Stock for exchange in
accordance with this Section 3.3 (such cash and shares of AFC 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.
AFC
shall take all steps necessary to cause the Exchange Agent, not later than
five
(5) business days after the Effective Time, to mail to each holder of a
Certificate or Certificates who has not previously surrendered such certificates
with an Election Form, a form letter of transmittal 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 BSFI 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 and the certificate so surrendered
shall 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 BSFI Common Stock shall have no rights, after the Effective Time,
with respect to such BSFI 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 AFC 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 AFC 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 similar 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.
3.3.5 Closing
of Transfer Books.
From
and after the Closing Date, there shall be no transfers on the stock transfer
books of BSFI of the BSFI Common Stock that were 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 (6) month period after the Effective Time, AFC shall
be
entitled to require the Exchange Agent to deliver to it any portion 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
AFC (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 AFC 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 the posting by such person of a bond in such amount
as
the Exchange Agent 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.
AFC 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 BSFI Common Stock such amounts as AFC
(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 AFC 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 BSFI Common Stock in respect of whom such deduction and
withholding were made by AFC or the Exchange Agent.
3.4 |
Treatment
of BSFI Options.
|
BSFI
Disclosure Schedule 3.4 sets forth all of the outstanding BSFI Options as of
the
date hereof. Immediately prior to the Effective Time, each BSFI Option, whether
or not vested or exercisable, shall be terminated and the holder thereof shall
be paid by BSFI immediately prior to the Effective Time an amount in cash
determined by multiplying (i) the excess, if any, of the Cash Consideration
over
the applicable per share exercise price of that option by (ii) the number of
shares of BSFI Common Stock that the holder could have purchased (assuming
full
vesting of that option) had that holder exercised that option immediately before
the Effective Time, less applicable tax withholding; provided, however, that
in
no event shall the foregoing treatment of the BSFI Options affect the Stock
Conversion Number or the provisions of Sections 3.2.5 and 3.2.6 hereof. Subject
to the foregoing, the BSFI Stock Option Plans and all BSFI Options issued
thereunder shall terminate at the Effective Time. Prior to the Effective Time,
BSFI shall take such actions as may be necessary to give effect to the
transactions contemplated by this Section 3.4, including, without
limitation, the provision of any notices to holders of BSFI Options as may
be
provided for in the BSFI Stock Option Plans and the adoption of any necessary
amendments to such plans. BSFI also shall use its reasonable best efforts to
obtain the written acknowledgement of each holder of a then-outstanding BSFI
Option with respect to the termination of such BSFI Option and the payment
therefor in accordance with the terms of this Agreement.
3.5 |
Bank
Merger.
|
BSFI
and
AFC shall use their reasonable best efforts to cause the merger of Oswego County
National Bank with and into Alliance Bank, with Alliance Bank as the surviving
institution. In addition, following the execution and delivery of this
Agreement, AFC will cause Alliance Bank, and BSFI will cause Oswego County
National Bank, to execute and deliver an agreement and plan of merger in respect
of the Bank Merger.
3.6 |
Reservation
of Shares.
|
AFC
shall
reserve for issuance a sufficient number of shares of the AFC Common Stock
for
the purpose of issuing shares of AFC Common Stock to the BSFI stockholders
in
accordance with this Article III.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF BSFI
BSFI
represents and warrants to AFC 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),
subject to the standard set forth in Section 4.1 and except as set forth in
the BSFI Disclosure Schedule delivered by BSFI to AFC on the date hereof, and
except as to any representation or warranty which specifically relates to an
earlier date, which only need be correct as of such earlier date. References
to
the Knowledge of BSFI shall include the Knowledge of Oswego County National
Bank.
4.1 |
Standard.
|
Except
as
set forth in the following sentence, no representation or warranty of BSFI
contained in this Article IV shall be deemed untrue or incorrect, and BSFI
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 this
Article IV, has had or is reasonably could be expected to have a Material
Adverse Effect, disregarding for these purposes (x) any qualification or
exception for, or reference to, materiality in any such representation or
warranty and (y) any use of the terms “material”, “materially”, “in all
material respects”, “Material Adverse Effect” or similar terms or phrases in any
such representation or warranty. The foregoing standard shall not apply to
representations and warranties contained in Sections 4.2 (other than the
last sentence of Sections 4.2.1 and 4.2.2), 4.3, 4.4, 4.5, 4.6, 4.7, 4.8,
4.9. 4.10. 4.11, 4.13, 4.15, 4.16, 4.27 and 4.28, which shall be deemed untrue,
incorrect and breached if they are not true and correct in all
respects.
4.2 |
Organization.
|
4.2.1 BSFI
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 bank holding company
under
the BHCA. BSFI has full corporate power and authority to carry on its business
as now conducted. BSFI 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.
4.2.2 Oswego
County National Bank is a national banking association duly organized, validly
existing and in good standing under the laws of the United States. The deposits
in Oswego County National Bank 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 Oswego County National Bank when due.
Oswego County National Bank is a member in good standing of each of the Federal
Reserve System and the FHLB and owns the requisite amount of stock of each
as
set forth on BSFI Disclosure Schedule 4.2.2.
4.2.3 BSFI
Disclosure Schedule 4.2.3 sets forth each BSFI Subsidiary and its
jurisdiction of incorporation or organization. Each BSFI Subsidiary is a
corporation, limited liability company or other legal entity as set forth on
BSFI Disclosure Schedule 4.2.3, duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization. Each BSFI Subsidiary 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 conduct of its business requires such
qualification.
4.2.4 The
respective minute books of BSFI, Oswego County National Bank and each other
BSFI
Subsidiary accurately records all corporate actions of their respective
stockholders and boards of directors (including committees).
4.2.5 Prior
to
the date of this Agreement, BSFI has made available to AFC true and correct
copies of the certificate of incorporation or articles of association, as
applicable, and bylaws or other governing documents of BSFI, Oswego County
National Bank and each other BSFI Subsidiary.
4.3 |
Capitalization.
|
4.3.1 The
authorized capital stock of BSFI consists of (i) 5,000,000 shares of BSFI Common
Stock and (ii) 1,000,000 shares of preferred stock, $.01 par value per share
(“BSFI
Preferred Stock”
and
collectively with the BSFI Common Stock, “BSFI
Stock”).
There
are 2,309,179 shares of BSFI Common Stock validly issued and outstanding, fully
paid and non-assessable and free of preemptive rights, (ii) 527,314 shares
of
BSFI Common Stock held by BSFI as Treasury Stock, but not including 27,196
shares of BSFI Common Stock held in trust under the BSFI Restricted Stock Plans
but not subject to an award of BSFI Restricted Stock, and (iii) no shares of
BSFI Preferred Stock issued or outstanding. BSFI does not own, of record or
beneficially, any shares of BSFI Stock which are not Treasury Stock. Oswego
County National Bank does not own, of record or beneficially, any shares of
BSFI
Stock. Neither BSFI nor any BSFI Subsidiary has or is bound by any Rights or
other arrangements of any character relating to the purchase, sale or issuance
or voting of, or right to receive dividends or other distributions on, any
capital stock of BSFI, or any other security of BSFI or a BSFI Subsidiary or
any
securities representing the right to vote, purchase or otherwise receive any
capital stock of BSFI or a BSFI Subsidiary or any other security of BSFI or
any
BSFI Subsidiary, other than shares of BSFI Common Stock underlying the BSFI
Options and BSFI Restricted Stock. BSFI has granted options to acquire 145,005
shares of BSFI Common Stock at a weighted average exercise price of $9.15 per
share. BSFI Disclosure Schedule 4.3.1 sets forth: the name of each holder
of a BSFI Option, identifying the number of shares each such individual may
acquire pursuant to the exercise of such options, the plan under which such
options were granted, the grant, vesting and expiration dates, and the exercise
price relating to the options held, and whether the BSFI Option is an incentive
stock option or a nonqualified stock option. BSFI Disclosure Schedule 4.3.1
also sets forth the name of each holder of record of BSFI Restricted Stock
and
the number of shares held by such Person. All shares of BSFI Common Stock
issuable pursuant to the BSFI Option Plans will be duly authorized, validly
issued, fully paid and non-assessable when issued upon the terms and conditions
specified in the instruments pursuant to which they are issuable.
4.3.2 BSFI
owns
all of the capital stock of each BSFI Subsidiary, free and clear of any lien
or
encumbrance. Except for the BSFI Subsidiaries and as set forth in BSFI
Disclosure Schedule 4.3.2, BSFI does not possess, directly or indirectly,
any equity interest in any corporate or other legal entity, except for equity
interests held in the investment portfolios of BSFI or any BSFI Subsidiary
(which as to any one issuer, do not exceed five percent (5%) of such issuer’s
outstanding equity securities) and equity interests held in connection with
the
lending activities of Oswego County National Bank, including stock in the FHLB.
4.3.3 To
BSFI’s
Knowledge, except as set forth on BSFI Disclosure Schedule 4.3.3, as of the
date hereof no Person is the beneficial owner (as defined in Section 13(d)
of the Exchange Act) of five percent (5%) or more of the outstanding shares
of
BSFI Common Stock.
4.3.4 No
bonds,
debentures, notes or other indebtedness having the right to vote on any matters
on which BSFI’s shareholders may vote have been issued by BSFI and are
outstanding.
4.4 |
Authority;
No Violation.
|
4.4.1 BSFI
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
and the approval of this Agreement by BSFI’s stockholders, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by BSFI and the completion by
BSFI
of the transactions contemplated hereby, up to and including the Merger, have
been duly and validly approved by the Board of Directors of BSFI. This Agreement
has been duly and validly executed and delivered by BSFI, and subject to
approval by the stockholders of BSFI and receipt of the Regulatory Approvals
and
due and valid execution and delivery of this Agreement by AFC, constitutes
the
valid and binding obligation of BSFI, enforceable against BSFI 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 (a)
Subject to compliance by AFC with the terms and conditions of this Agreement,
the execution and delivery of this Agreement by BSFI, subject to receipt of
Regulatory Approvals, and BSFI’s and AFC’s compliance with any conditions
contained therein, and subject to the receipt of the approval of the
stockholders of BSFI, the consummation of the transactions contemplated hereby,
and (b) compliance by BSFI with the terms and provisions hereof will not
(i) conflict with or result in a breach of any provision of the certificate
of incorporation or articles of association, as applicable, and bylaws of BSFI
or any BSFI Subsidiary; (ii) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to BSFI
or
any BSFI 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 or amendment 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 BSFI or any BSFI 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 BSFI or any BSFI Subsidiary is a party, or by which they
or
any of their respective properties or assets may be bound or
affected.
4.5 |
Consents.
|
Except
for (a) the receipt of the Regulatory Approvals and compliance with any
conditions contained therein, (b) compliance with applicable requirements
of the Securities Act, the Exchange Act and state securities or “blue sky” laws;
(c) the filing of the Certificate of Merger with the New York Department of
State and the Delaware Department of State, and (d) the approval of this
Agreement by the requisite vote of the stockholders of BSFI and the shareholders
of AFC, no consents, waivers or approvals of, or filings or registrations with,
any Governmental Entity or Bank Regulator are necessary, and no consents,
waivers or approvals of, or filings or registrations with, any other third
parties are necessary, in connection with (x) the execution and delivery of
this Agreement by BSFI, the completion by BSFI of the Merger and the performance
by BSFI of its obligations hereunder or (y) the execution and delivery of
the agreement and plan of merger in respect of the Bank Merger and the
completion of the Bank Merger. BSFI has no reason to believe that (i) any
required Regulatory Approvals or other required consents or approvals will
not
be received or will include the imposition of any condition (financial or
otherwise) or requirement that could reasonably be expected by BSFI to result
in
a Material Adverse Effect on BSFI and Oswego County National Bank, taken as
a
whole, or AFC and Alliance Bank, taken as a whole, or that (ii) any public
body or authority having jurisdiction over the affairs of BSFI or its
Subsidiaries, the consent or approval of which is not required or pursuant
to
the rules of 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 The
BSFI
Regulatory Reports have been prepared in all material respects in accordance
with applicable regulatory accounting principles and practices throughout the
periods covered by such statements, and fairly present in all material respects
the consolidated financial position, results of operations and changes in
shareholders’ equity of BSFI as of and for the periods ended on the dates
thereof, in accordance with applicable regulatory accounting principles applied
on a consistent basis.
4.6.2 BSFI
has
previously made available to AFC the BSFI Financial Statements covering periods
ended prior to the date hereof. The BSFI Financial Statements have been prepared
in accordance with GAAP in all material respects, 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 BSFI and the BSFI 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.
4.6.3 At
the
date of each consolidated statement of financial condition included in the
BSFI
Financial Statements or in the BSFI Regulatory Reports, BSFI 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
BSFI Financial Statements or in the BSFI Regulatory Reports 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, and
subject, in the case of any unaudited statements, to normal, recurring audit
adjustments and the absence of footnotes.
4.7 |
Taxes.
|
BSFI
and
the BSFI Subsidiaries are members of the same affiliated group within the
meaning of Code Section 1504(a). BSFI, on behalf of itself and its Subsidiaries,
has timely filed or caused to be filed all material foreign, federal, state
and
local income, franchise, excise, real and personal property and other Tax
returns and reports (including, but not limited to, those filed on a
consolidated, combined or unitary basis) required to have been filed by BSFI
and
the BSFI Subsidiaries prior to the date hereof, or requests for extensions
to
file such returns and reports have been timely filed, except that BSFI has
not
filed any Tax returns on behalf of Xxxx’x for any period prior to the fiscal
year ended December 31, 2005. All of the foregoing returns and
reports are true, correct, and complete. BSFI and the BSFI Subsidiaries have
timely paid or, prior to the Effective Time will pay, all Taxes, whether or
not
shown on such returns or reports, due or claimed to be due to any Governmental
Entity other than Taxes which are being contested in good faith or for which
adequate provision has been made on the BSFI Financial Statements. BSFI and
the
BSFI Subsidiaries have paid and will pay all installments of estimated Taxes
due
on or before the Effective Time. BSFI and the BSFI Subsidiaries have declared
on
their Tax returns all positions taken therein that could give rise to a
substantial underpayment of United States Federal Income Tax within the meaning
of Section 6662 of the Code (or any corresponding provision of state or local
laws). BSFI and the BSFI Subsidiaries have paid or made adequate provision
in
accordance with GAAP in the BSFI SEC Reports and the BSFI Financial Statements
for all Taxes payable in respect of all periods ending on or prior to the date
of this Agreement and will have made or provided for all Taxes payable in
respect of all periods ended on or prior to the Closing Date. BSFI and its
Subsidiaries are subject to Tax audits in the ordinary course of business.
BSFI
management does not believe that an adverse resolution to any of such audits
would be reasonably likely to have a Material Adverse Effect on BSFI. BSFI
and
the BSFI Subsidiaries have not been notified in writing by any jurisdiction
that
the jurisdiction believes that BSFI or any of the BSFI Subsidiaries were
required to file any Tax return that was not filed. The BSFI Subsidiaries have
not been a member of a group with which they have filed or been included in
a
combined, consolidated or unitary income Tax return other than a group the
common parent of which was BSFI. BSFI or the BSFI Subsidiaries were not
obligated to make, other than as set forth on the BSFI Disclosure Schedule
4.7,
and as a result of any event connected with the transactions contemplated by
this Agreement, will not become obligated to make, any “excess parachute
payment” within the meaning of Section 280G of the Code in connection with the
“change of control” resulting from the transactions contemplated by this
Agreement. As of the date hereof, all deficiencies proposed as a result of
any
audits have been paid or settled. There are no claims or assessments pending
against BSFI or any BSFI Subsidiary for any alleged deficiency in any Tax,
and
neither BSFI nor any BSFI Subsidiary has been notified in writing of any
proposed Tax claims or assessments against BSFI or any BSFI Subsidiary. BSFI
and
the BSFI Subsidiaries each have complied with all applicable laws relating
to
the payment, collection and withholding of amounts on account of Taxes, have
duly and timely withheld, collected and paid over to the appropriate taxing
authority all amounts required to be so withheld and paid under all applicable
laws, and have duly and timely filed all Tax returns with respect to such
withheld Taxes, within the time prescribed under any applicable law. BSFI and
the BSFI Subsidiaries have delivered to AFC true and complete copies of all
Tax
returns of BSFI and the BSFI Subsidiaries for taxable periods ending within
three (3) years of the date of this Agreement.
4.8 |
No
Material Adverse Effect.
|
Neither
BSFI nor any BSFI Subsidiary has suffered any Material Adverse Effect since
December 31, 2005 and, to BSFI’s Knowledge, 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 BSFI.
4.9 |
Material
Contracts; Leases; Defaults.
|
4.9.1 Except
as
set forth in BSFI Disclosure Schedule 4.9.1, neither BSFI nor any BSFI
Subsidiary is a party to or subject to: (i) any employment, consulting or
severance contract or arrangement with any past or present officer, director,
employee or consultant of BSFI or any BSFI Subsidiary, except for “at will”
arrangements; (ii) any plan, arrangement or contract providing for bonuses,
pensions, options, deferred compensation, retirement payments, profit sharing
or
similar arrangements for or with any past or present officers, directors,
employees or consultants of BSFI or any BSFI Subsidiary; (iii) any
collective bargaining agreement with any labor union relating to employees
of
BSFI or any BSFI Subsidiary; (iv) any agreement which by its terms limits
or affects the payment of dividends by BSFI or any BSFI Subsidiary; (v) any
instrument evidencing or related to indebtedness for borrowed money in excess
of
$50,000, whether directly or indirectly, by way of purchase money obligation,
conditional sale, lease purchase, guaranty or otherwise, in respect of which
BSFI or any BSFI Subsidiary is an obligor to any person, which instrument
evidences or relates to indebtedness other than deposits, FHLB advances with
a
term to maturity not in excess of one year, repurchase agreements, bankers’
acceptances, and transactions in “federal funds” or which contains financial
covenants or other non-customary 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 BSFI or any BSFI Subsidiary; (vi) any other
agreement, written or oral, which is not terminable without cause on 60 days’
notice or less without penalty or payment, or that obligates BSFI or any BSFI
Subsidiary for the payment of more than $25,000 annually or for the payment
of
more than $50,000 over its remaining term; or (vii) any agreement (other
than this Agreement), contract, arrangement, commitment or understanding
(whether written or oral) that materially restricts or limits the conduct of
business by BSFI or any BSFI Subsidiary.
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 BSFI 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 BSFI nor any BSFI Subsidiary is in
material default 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 AFC on or before
the date hereof, are listed on BSFI Disclosure Schedules 4.9.1 and 4.9.2
and are in full force and effect without modification on the date hereof. Except
as set forth in BSFI Disclosure Schedule 4.9.3, no such agreement, plan,
contract, or arrangement (i) provides for acceleration of the vesting of
benefits or payments due thereunder upon the occurrence of a change in ownership
or control of BSFI or any BSFI Subsidiary or upon the occurrence of a subsequent
event; (ii) requires BSFI or any BSFI Subsidiary to provide a benefit in
the form of BSFI Common Stock or determined by reference to the value of BSFI
Common Stock or (iii) contains provisions which permit an employee or
independent contractor to terminate such agreement or arrangement without cause
and continue to accrue future benefits thereunder.
4.10 |
Ownership
of Property; Insurance
Coverage.
|
4.10.1 BSFI
and
each BSFI Subsidiary has good and, as to real property, marketable title to
all
assets and properties owned by BSFI or each BSFI Subsidiary, as applicable,
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
most recent consolidated statement of financial condition contained in the
BSFI
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 consolidated statement of financial condition),
subject to no 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 a BSFI Subsidiary acting in a fiduciary capacity, and (ii) statutory
liens for amounts not yet delinquent or which are being contested in good faith.
BSFI and the BSFI Subsidiaries, as lessee, have the right under valid and
existing leases of real and personal properties used by BSFI and the BSFI
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 BSFI Financial
Statements.
4.10.2 With
respect to all material agreements pursuant to which BSFI or any BSFI Subsidiary
has purchased securities subject to an agreement to resell, if any, BSFI or
such
BSFI Subsidiary, as the case may be, has a lien or security interest (which
to
BSFI’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 BSFI
and
each BSFI Subsidiary currently maintain insurance considered by each of them
to
be reasonable for their respective operations. Neither BSFI nor any BSFI
Subsidiary, has received notice from any insurance carrier on or before the
date
hereof 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. Except as listed on
BSFI
Disclosure Schedule 4.10.3, there are presently no claims pending under such
policies of insurance and no notices of claim have been given by BSFI or any
BSFI Subsidiary under such policies. All such insurance is valid and enforceable
and in full force and effect (other than insurance that expires in accordance
with its terms), and within the last three years BSFI and each BSFI Subsidiary
has received each type of insurance coverage for which it has applied and during
such periods has not been denied indemnification for any claims submitted under
any of its insurance policies. BSFI Disclosure Schedule 4.10.3 identifies
all policies of insurance maintained by BSFI and each BSFI Subsidiary, including
the name of the insurer, the policy number, the type of policy and any
applicable deductibles, as well as the other matters required to be disclosed
under this Section 4.10.3. BSFI has made available to AFC copies of all of
the policies listed on BSFI Disclosure Schedule 4.10.3.
4.11 |
Legal
Proceedings.
|
Except
as
set forth on BSFI Disclosure Schedule 4.11, neither BSFI nor any BSFI Subsidiary
is a party to any, and there are no pending or, to BSFI’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 BSFI or any BSFI Subsidiary, (ii) to which
BSFI or any BSFI 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 reasonably could be expected
to adversely affect the ability of BSFI or any BSFI Subsidiary to perform under
this Agreement.
4.12 |
Compliance
With Applicable Law.
|
Except
as
set forth on BSFI Disclosure Schedule 4.12:
4.12.1 To
BSFI’s
Knowledge, BSFI and each BSFI 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, its conduct of business
and
its relationship with its employees, including, without limitation, the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001, the Equal Credit Opportunity Act, the Truth
in Lending Act, the Real Estate Settlement Procedures Act, the Consumer Credit
Protection Act, the Fair Credit Reporting Act, the Fair Debt Collections 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 BSFI
nor
any BSFI Subsidiary has received any written notice to the
contrary.
4.12.2 BSFI
and
each BSFI Subsidiary has all material permits, licenses, authorizations, orders
and approvals of, and has made all filings, applications and registrations
with,
all Governmental Entities and 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
BSFI,
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 BSFI nor any BSFI Subsidiary has
received any written notification or any other communication from any Bank
Regulator or Insurance Regulator (i) asserting that BSFI or any BSFI
Subsidiary is not in material compliance with any of the statutes, regulations
or ordinances which such Bank Regulator or Insurance Regulator enforces;
(ii) threatening to revoke any license, franchise, permit or governmental
authorization; (iii) requiring or threatening to require BSFI or any BSFI
Subsidiary, or indicating that BSFI or any BSFI 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 insurance
agencies, or engages in the insurance of bank deposits, restricting or limiting,
or purporting to restrict or limit the operations of BSFI or any BSFI
Subsidiary, including without limitation any restriction on the payment of
dividends; or (iv) directing, restricting or limiting, or purporting to
direct, restrict or limit the operations of BSFI or any BSFI Subsidiary (any
such notice, communication, memorandum, agreement or order described in this
sentence is hereinafter referred to as a “Regulatory
Agreement”).
Neither BSFI nor any BSFI Subsidiary has consented to or entered into any
Regulatory Agreement that is currently in effect. BSFI has disclosed to AFC
its
most recent regulatory ratings.
4.13 |
Employee
Benefit Plans.
|
4.13.1 BSFI
Disclosure Schedule 4.13.1 contains a list of all written and unwritten
pension, retirement, profit-sharing, thrift, savings, deferred compensation,
stock option, employee stock ownership, employee stock purchase, restricted
stock, severance pay, retention, vacation, bonus or other incentive plans,
all
employment, change in control, consulting, severance and retention agreements,
all other written employee programs, arrangements or agreements, all medical,
vision, dental, disability, life insurance, workers’ compensation, employee
assistance or other health or welfare plans, and all other employee benefit
or
fringe benefit plans, including “employee benefit plans” as that term is defined
in Section 3(3) of ERISA, currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by BSFI or any of its ERISA Affiliates
for the benefit of employees, former employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries of BSFI and under
which employees, former employees, retirees, dependents, spouses, directors,
or
other beneficiaries of BSFI are eligible to participate (collectively, the
“BSFI
Benefit Plans”).
BSFI
has furnished or otherwise made available to AFC true and complete copies of
(i) the plan documents and summary plan descriptions for each written BSFI
Benefit Plan, (ii) a summary of each unwritten BSFI Benefit Plan,
(iii) the annual report (Form 5500 series) for the three most recent
years for each BSFI Benefit Plan (if applicable), (iv) the actuarial
valuation reports with respect to each tax-qualified BSFI Benefit Plan that
is a
defined benefit plan for the three most recent years, (v) all related trust
agreements, insurance contracts or other funding agreements which implement
the
BSFI Benefit Plans (if applicable), (vi) the most recent IRS determination
letter with respect to each tax-qualified BSFI Benefit Plan (or, for a BSFI
Benefit Plan maintained under a pre-approved prototype or volume submitter
plan,
the IRS determination letter on such pre-approved plan) and (vii) all
substantive correspondence relating to any BSFI Benefit Plan addressed to or
received from the IRS, the Department of Labor or any other Governmental Entity
within the past 5 years. BSFI Disclosure Schedule 4.13.1 identifies each
BSFI Benefit Plan that may be subject to Section 409A of the Code (“Non-qualified
Deferred Compensation Plan”)
and
the aggregate amounts deferred under each such Non-qualified Deferred
Compensation Plan as of March 31, 2006. Each Non-qualified Deferred
Compensation Plan has been maintained and operated in compliance with Section
409A of the Code so that no Taxes under Section 409A of the Code may be imposed
on participants in such plans.
4.13.2 All
BSFI
Benefit Plans are in material compliance with (and have been managed and
administrated in accordance with) the applicable terms of ERISA, the Code and
any other applicable laws. Except as set forth on BSFI Disclosure Schedule
4.13.2, each BSFI Benefit Plan governed by ERISA that is intended to be a
qualified retirement plan under Section 401(a) of the Code has either
(i) received a favorable determination letter from the IRS (and BSFI is not
aware of any circumstances likely to result in revocation of any such favorable
determination letter) or timely application has been made therefore, or
(ii) is maintained under a prototype plan which has been approved by the
IRS and is entitled to rely upon the IRS National Office opinion letter issued
to the prototype plan sponsor. To the Knowledge of BSFI and the BSFI
Subsidiaries, there exists no fact which would adversely affect the
qualification of any of the BSFI Benefit Plans intended to be qualified under
Section 401(a) of the Code, or any threatened or pending claim against any
of the BSFI Benefit Plans or their fiduciaries by any participant, beneficiary
or Governmental Entity.
4.13.3 Except
as
set forth on BSFI Disclosure Schedule 4.13.3, no “defined benefit plan” (as
defined in Section 414(j) of the Code) has been maintained at any time by
BSFI or any of its ERISA Affiliates for the benefit of the employees or former
employees of BSFI or its Subsidiaries.
4.13.4 Within
the last six years, neither BSFI nor any of its ERISA Affiliates maintained
or
had any obligation to contribute to a BSFI Benefit Plan which is a
“multiemployer plan” within the meaning of Section 3(37) of ERISA, and
within the last six years neither BSFI nor any of its ERISA Affiliates has
incurred any withdrawal liability within the meaning of Section 4201 of
ERISA to any such “multiemployer plan.” Neither BSFI nor any of its ERISA
Affiliates has incurred any unsatisfied liability (other than Pension Benefit
Guaranty Corporation (“PBGC”)
premiums) to the PBGC, the IRS or any other individual or entity under
Title IV of ERISA or Section 412 of the Code, and no event or
condition exists that could reasonably be expected to result in the imposition
of any liability on BSFI or any of its ERISA Affiliates under such provisions
or
that could reasonably be expected to have an adverse effect on AFC or Alliance
Bank.
4.13.5 BSFI
has
complied in all material respects with the notice and continuation requirements
of Parts 6 and 7 of Subtitle B of Title I of ERISA and
Section 4980B of the Code, and the regulations thereunder. All reports,
statements, returns and other information required to be furnished or filed
with
respect to BSFI Benefit Plans have been timely furnished, filed or both in
accordance with Sections 101 through 105 of ERISA and Sections 6057
through 6059 of the Code, and they are true, correct and complete. To BSFI’s
Knowledge, records with respect to BSFI Benefit Plans have been maintained
in
compliance with Section 107 of ERISA. To BSFI’s Knowledge, neither BSFI nor
any other fiduciary (as that term is defined in Section 3(21) of ERISA)
with respect to any of BSFI Benefit Plans has any liability for any breach
of
any fiduciary duties under Sections 404, 405 or 409 of ERISA.
4.13.6 BSFI
has
not, with respect to any of BSFI Benefit Plans, nor, to BSFI’s Knowledge, has
any administrator of any of BSFI Benefit Plans, the related trusts or any
trustee thereof, engaged in any prohibited transaction which would subject
BSFI,
any ERISA Affiliate of BSFI, any of BSFI Benefit Plans, any administrator or
trustee or any party dealing with any of BSFI Benefit Plans or any such trusts,
to a Tax or penalty on prohibited transactions imposed by ERISA,
Section 4975 of the Code, or to any other liability under
ERISA.
4.13.7 Except
as
set forth on BSFI Disclosure Schedule 4.13.7, BSFI has no liability for retiree
health and life benefits under any of BSFI Benefit Plans.
4.13.8 Except
as
set forth on BSFI Disclosure Schedule 4.13.8, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (A) result in any payment (including severance or unemployment
compensation) becoming due to any director or any employee of BSFI from BSFI
under any BSFI Benefit Plan, (B) increase any benefits otherwise payable
under any BSFI Benefit Plan or (C) result in any acceleration of the time
of payment or vesting of any such benefit. Except as set forth on BSFI
Disclosure Schedule 4.13.8, no payment which is or may be made by, from or
with respect to any BSFI Benefit Plan, either alone or in conjunction with
any
other payment will or could properly be characterized as an “excess parachute
payment” under Section 280G of the Code (or any corresponding provisions of
state, local or foreign tax law) or will or could, either individually or
collectively, provide for any payment by BSFI or any of its ERISA Affiliates
that would not be deductible under Code Section 162(m).
4.13.9 The
actuarial present values of all accrued deferred compensation entitlements
(including entitlements under any executive compensation, supplemental
retirement, or employment agreement) of employees and former employees of BSFI
and their respective beneficiaries, other than entitlements accrued pursuant
to
funded retirement plans subject to the provisions of Section 412 of the
Code or Section 302 of ERISA, have been fully reflected on the BSFI
Financial Statements to the extent required by and in accordance with
GAAP.
4.13.10 There
is
not, and has not been, any trust or fund maintained by or contributed to by
BSFI
or its employees to fund an employee benefit plan which would constitute a
Voluntary Employees’ Beneficiary Association or a “welfare benefit fund” within
the meaning of Section 419(a) of the Code.
4.13.11 No
claim,
lawsuit, arbitration or other action has been asserted or instituted or, to
the
Knowledge of BSFI, has been threatened or is anticipated, against any BSFI
Benefit Plan (other than routine claims for benefits and appeals of such
claims), BSFI or any BSFI Subsidiary or any director, officer or employee
thereof, or any of the assets of any trust of any BSFI Benefit
Plan.
4.14 |
Brokers,
Finders and Financial
Advisors.
|
Neither
BSFI nor any BSFI 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 Austin Associates, LLC by BSFI and the fee payable pursuant
thereto. A true and correct copy of the engagement agreement with Austin
Associates, LLC, setting forth the fee payable to Austin Associates, LLC for
its
services rendered to BSFI in connection with the Merger and transactions
contemplated by this Agreement, is attached to BSFI Disclosure
Schedule 4.14.
4.15 |
Environmental
Matters.
|
4.15.1 Except
as
may be set forth in BSFI Disclosure Schedule 4.15, with respect to BSFI and
each BSFI Subsidiary:
(A) Each
of
BSFI and the BSFI Subsidiaries, and to the Knowledge of BSFI and the BSFI
Subsidiaries, the BSFI Loan Properties (as defined in Section 4.15.2) are,
and have been, in material compliance with, and are not liable under, any
Environmental Laws;
(B) Neither
BSFI nor any BSFI Subsidiary has received written notice that there is any
material suit, claim, action, demand, executive or administrative order,
directive, request for information, investigation or proceeding pending and,
to
the Knowledge of BSFI and the BSFI Subsidiaries, no such action is threatened,
before any court, governmental agency or other forum against them or any BSFI
Loan Property (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 BSFI, any of the BSFI Subsidiaries or on or at a BSFI
Loan
Property;
(C) To
the
Knowledge of BSFI and the BSFI Subsidiaries, the properties currently owned
or
operated by BSFI or any BSFI 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 in amounts permitted under applicable
Environmental Law;
(D) To
the
Knowledge of BSFI and the BSFI Subsidiaries, there are no underground storage
tanks on, in or under any properties owned or operated by BSFI or any of the
BSFI Subsidiaries or any BSFI Loan Property, and no underground storage tanks
have been closed or removed from any properties owned or operated by BSFI or
any
of the BSFI Subsidiaries or any BSFI Loan Property except as in compliance
with
Environmental Laws; and
(E) During
the period of (a) BSFI’s or any of the BSFI Subsidiaries’ ownership or operation
of any of their respective current properties or (b) BSFI’s or any of the
BSFI Subsidiaries’ participation in the management of any BSFI Loan Property, to
the Knowledge of BSFI and the BSFI Subsidiaries, there has been no material
contamination by or material release of Materials of Environmental Concern
in,
on, under or affecting such properties. To the Knowledge of BSFI and the BSFI
Subsidiaries, prior to the period of (x) BSFI’s or any of the BSFI
Subsidiaries’ ownership or operation of any of their respective current
properties or (y) BSFI’s or any of the BSFI Subsidiaries’ participation in
the management of any BSFI Loan Property, there was no material contamination
by
or release of Materials of Environmental Concern in, on, under or affecting
such
properties.
(F) Neither
BSFI nor any other BSFI Subsidiary has conducted any environmental studies
during the past five (5) years (other than Phase I studies or Phase II
studies which did not indicate any contamination of the environment by Materials
of Environmental Concern above reportable levels) with respect to any properties
owned or leased by it or any of its Subsidiaries, or with respect to any BSFI
Loan Property.
4.15.2 For
purposes of this Section 4.15, “BSFI
Loan Property”
means
any property in which BSFI or a BSFI Subsidiary holds a direct or indirect
security interest securing to a loan or other extension of credit made by them,
including through a BSFI Loan Participation, and “BSFI
Loan Participation”
means
a
participation interest in a loan or other extension of credit other than by
BSFI
or a BSFI Subsidiary.
4.16 |
Loan
Portfolio.
|
4.16.1 The
allowances for loan losses reflected in the notes to BSFI’s audited consolidated
statements of financial condition at December 31, 2005 and 2004 were, and
the allowance for loan losses shown in the notes to the unaudited consolidated
financial statements for periods ending after December 31, 2005 were, or
will be, adequate, as of the dates thereof, under GAAP.
4.16.2 BSFI
Disclosure Schedule 4.16.2 sets forth a listing, as of the most recently
available date (and in no event earlier than March 31, 2006), by account,
of: (A) all loans (including loan participations) of Oswego County National
Bank that have been accelerated during the past twelve months; (B) with
respect to all commercial loans (including commercial real estate loans), all
notification letters and other written communications from Oswego County
National Bank to any borrowers, customers or other parties during the past
twelve months wherein Oswego County National Bank has requested or demanded
that
actions be taken to correct existing defaults or facts or circumstances which
may become defaults; (C) each borrower, customer or other party which has
notified Oswego County National Bank during the past twelve months of, or has
asserted against BSFI or Oswego County National Bank, in each case in writing,
any “lender liability” or similar claim, and, to the Knowledge of BSFI and
Oswego County National Bank, each borrower, customer or other party which has
given BSFI or Oswego County National Bank any oral notification of, or orally
asserted to or against BSFI or Oswego County National Bank, any such claim;
and
(D) 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 March 31, 2006 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 collectibility of principal and/or 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 (E) all other assets
classified by BSFI or Oswego County National Bank 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. BSFI Disclosure Schedule 4.16.2 may
exclude any individual loan with a principal outstanding balance of less than
$50,000, provided that BSFI Disclosure Schedule 4.16.2 includes, for each
category described, the aggregate amount of individual loans with a principal
outstanding balance of less than $50,000 that has been excluded.
4.16.3 All
loans
receivable (including discounts) and accrued interest entered on the books
of
BSFI and the Oswego County National Bank arose out of bona fide arm’s-length
transactions, were made for good and valuable consideration in the ordinary
course of BSFI’s and Oswego County National Bank’s respective businesses, 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.
The
loans, discounts and the accrued interest reflected on the books of BSFI and
Oswego County National Bank 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. All such loans are owned by BSFI or Oswego County National Bank 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 valid, true and genuine, and what
they
purport to be.
4.17 |
Related
Party Transactions.
|
Neither
BSFI nor any BSFI Subsidiary is a party to any transaction (including any loan
or other credit accommodation) with any Affiliate of BSFI or any BSFI
Subsidiary, except as set forth in BSFI Disclosure Schedule 4.17 or as
described in BSFI’s proxy statement dated August 22, 2005 distributed in
connection with its annual meeting of stockholders held on September 21,
2005. Except as described in such 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 collectibility or present
other unfavorable features. No loan or credit accommodation to any Affiliate
of
BSFI or any BSFI 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. Neither BSFI nor any BSFI Subsidiary has
been notified that principal or 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 is
inappropriate.
4.18 |
Deposits.
|
None
of
the deposits of Oswego County National Bank is a “brokered deposit” as defined
in 12 C.F.R. Section 337.6(a)(2).
4.19 |
The
approval of the Board of Directors of BSFI constitutes the approval of this
Agreement for purposes of Section 203 of the Delaware Law. To the Knowledge
of
BSFI, except for Section 203 of the Delaware Law (which has been rendered
inapplicable), no state takeover statute is applicable to the Merger and the
transactions contemplated by this Agreement.
Neither
BSFI nor any BSFI 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.
All
interest rate swaps, caps, floors, option agreements, futures and forward
contracts and other similar risk management arrangements, whether entered into
for BSFI’s own account, or for the account of one or more of BSFI’s Subsidiaries
or their customers (all of which are set forth in BSFI Disclosure
Schedule 4.21), were entered into in compliance with all applicable laws,
rules, regulations and regulatory policies, and to the Knowledge of BSFI and
each BSFI Subsidiary, with counterparties believed to be financially responsible
at the time; and to BSFI’s and each BSFI Subsidiary’s Knowledge each of them
constitutes the valid and legally binding obligation of BSFI or such BSFI
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 BSFI nor any BSFI Subsidiary, nor, to the Knowledge
of
BSFI and each BSFI Subsidiary, any other party thereto, is in breach of any
of
its obligations under any such agreement or arrangement.
4.22 |
BSFI
has
received an opinion, a copy of which will be provided to AFC, from Austin
Associates, LLC 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 BSFI pursuant to this
Agreement is fair to such shareholders from a financial point of view. Such
opinion has not been amended or rescinded as of the date of this
Agreement.
BSFI
and
each BSFI Subsidiary owns or, to BSFI’s Knowledge, possesses valid and binding
licenses and other rights (subject to expirations in accordance with their
terms) to use all patents, copyrights, trade secrets, trade names, computer
software, service marks and trademarks used in its respective business, each
without payment, and neither BSFI nor any BSFI Subsidiary has received any
notice of breach or conflict with respect thereto that asserts the rights of
others. BSFI and each BSFI Subsidiary 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.
4.24 |
Duties
as Fiduciary.
|
Oswego
County National Bank (i) is not presently engaged in any line of business which
requires it to act in a “fiduciary capacity” to any other Person and (ii) has,
if required by virtue of any line of business in which it previously was engaged
in a “fiduciary capacity,” performed all of its duties in a fashion that
complied with all applicable laws, regulations, orders, agreements, xxxxx,
instruments, and common law standards in effect at that time. Oswego County
National Bank has not received notice of any claim, allegation, or complaint
from any person that Oswego County National Bank failed to perform these duties
in a manner that complied with all applicable laws, regulations, orders,
agreements, xxxxx, instruments, and common law standards, except for notices
involving matters that have been resolved and any cost of such resolution is
reflected in BSFI’s Financial Statements. For purposes of this Section 4.24, the
term “fiduciary capacity” (i) shall mean (a) acting as trustee, executor,
administrator, registrar of stocks and bonds, transfer agent, guardian,
assignee, receiver, or custodian under a uniform gifts to minors act and (b)
possessing investment discretion on behalf of another, and (ii) shall exclude
Oswego County National Bank’s capacity with respect to individual retirement
accounts.
4.25 |
Employees;
Labor Matters.
|
4.25.1 BSFI
Disclosure Schedule 4.25.1 sets forth the following information with
respect to each employee of BSFI and the BSFI Subsidiaries (including Xxxx’x
Agency, Inc.) as of March 31, 2006: job location, job title, current annual
base salary and years of service.
4.25.2 There
are
no labor or collective bargaining agreements to which BSFI or any BSFI
Subsidiary is a party. There is no union organizing effort pending or, to the
Knowledge of BSFI, threatened against BSFI or any BSFI Subsidiary. There is
no
labor strike, labor dispute (other than routine employee grievances that are
not
related to union employees), work slowdown, stoppage or lockout pending or,
to
the Knowledge of BSFI, threatened against BSFI or any BSFI Subsidiary. There
is
no unfair labor practice or labor arbitration proceeding pending or, to the
Knowledge of BSFI, threatened against BSFI or any BSFI Subsidiary (other than
routine employee grievances that are not related to union employees). BSFI
and
each BSFI Subsidiary is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and are not engaged in any unfair labor practice. Neither
BSFI
nor any BSFI Subsidiary is a party to, or bound by, any agreement for the
leasing of employees.
4.25.3 To
BSFI’s
Knowledge, all Persons who at any time since January 1, 2002 have been
treated as independent contractors by BSFI or any BSFI Subsidiary for Tax
purposes have met the criteria to be so treated under all applicable federal,
state and local Tax laws, rules and regulations.
The
information relating to BSFI and any BSFI Subsidiary to be contained in the
Merger Registration Statement, or in any other document filed with any Bank
Regulator or other Governmental Entity 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.
Since
January 1, 2003, BSFI has filed with the SEC all forms, reports, schedules,
registration statements, definitive proxy statements and information statements
or other filings (“BSFI
SEC Reports”)
required to be filed by it with the SEC. As of their respective dates, BSFI
SEC
Reports complied as to form with the requirements of the Exchange Act or the
Securities Act, as applicable, and the applicable rules and regulations of
the
SEC promulgated thereunder in all material respects. As of their
respective dates and as of the date any information from the BSFI SEC Reports
has been incorporated by reference, the BSFI SEC Reports did not contain any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary to make the statements therein made, in light
of
the circumstances under which they were made, not misleading. BSFI has
filed all contracts, agreements and other documents or instruments required
to
be filed as exhibits to the BSFI SEC Reports.
4.28 |
None
of
BSFI or any BSFI Subsidiary’s records, systems, controls data or information are
recorded, stored, maintained, operated or otherwise wholly or partly dependent
on or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access
thereto and therefrom) are not under their exclusive ownership and direct
control. BSFI has devised and maintains a system of internal accounting controls
sufficient to provide reasonable assurances regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and the
applicable provisions of the Securities Act or the Exchange Act.
BSFI
and
each BSFI Subsidiary has obtained the written consent of each employee on whose
behalf bank owned life insurance (“BOLI”)
has
been purchased. Oswego County National Bank has taken all actions necessary
to
comply with applicable law in connection with its purchase of BOLI. BSFI
Disclosure Schedule 4.29 sets forth all BOLI owned by BSFI or any BSFI
Subsidiary and a list of the lives insured thereunder.
4.30 |
American
Jobs Creation Act.
|
BSFI
and
each BSFI Subsidiary has taken, or will take, any and all actions necessary
to
comply with the provisions of the American Jobs Creation Act of 2004, and all
rules and regulations promulgated thereunder, that are currently in effect
or
that become effective prior to the Closing Date and are required to be complied
with prior to Closing; provided, however, that until IRS regulations are
promulgated under Section 409A of the Code, BSFI and each BSFI Subsidiary
shall only be required to make good faith efforts to comply with
Section 409A of the Code and the regulations proposed
thereunder.
4.31 |
Xxxx’x
Agency, Inc.
|
4.31.1 Xxxx’x
Agency, Inc., a New York corporation (“Xxxx’x”)
is a
wholly-owned Subsidiary of BSFI.
4.31.2 Xxxx’x
and its Affiliates are in compliance with all laws, rules, and regulations
applicable to Persons engage in the insurance agency business. Neither Xxxx’x
nor any of its Affiliates has been a party, directly or indirectly, to the
placement of insurance which is unlawful.
4.31.3 To
the
Knowledge of BSFI and Xxxx’x, no binder of insurance has been issued or sent to
any Person by or on behalf of Xxxx’x unless and until the relevant risk was
properly bound and all binders of insurance on the part of Xxxx’x are complete
and accurate.
ARTICLE
V
AFC
represents and warrants to BSFI 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),
subject to the standard set forth in Section 5.1 and except as set forth in
the AFC Disclosure Schedule delivered by AFC to BSFI on the date hereof, and
except to any representation of warranty which specifically relates to an
earlier date, which only need be so correct as of such earlier date. AFC has
made a good faith, diligent effort to ensure that the disclosure on each
schedule of the AFC Disclosure Schedule corresponds to the
Section referenced herein. References to the Knowledge of AFC shall include
the Knowledge of Alliance Bank.
5.1 |
Standard.
|
Except
as
set forth in the following sentence, no representation or warranty of AFC
contained in this Article V shall be deemed untrue or incorrect, and AFC
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 reasonably could be expected to have a Material
Adverse Effect, disregarding for these purposes (x) any qualification or
exception for, or reference to, materiality in any such representation or
warranty and (y) any use of the terms “material”, “materially”, “in all
material respects”, “Material Adverse Effect” or similar terms or phrases in any
such representation or warranty. The foregoing standard shall not apply to
representations and warranties contained in Sections 5.2 (other than the
last sentence of Sections 5.2.1 and 5.2.2), 5.3, 5.4, 5.5, 5.6, 5.7, 5.8,
5.9, 5.10, 5.11, 5.13, 5.15, 5.20 and 5.21 which shall be deemed untrue,
incorrect and breached if they are not true and correct in all respects.
5.2 |
Organization.
|
5.2.1 AFC
is a
corporation duly organized, validly existing and in good standing under the
laws
of the State of New York, and is duly registered as a financial holding company
under the BHCA. AFC 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 Alliance
Bank is a national banking association duly organized, and validly existing
under the laws of the United States. The deposits in Alliance Bank 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.
Alliance Bank is a member of the Federal Reserve System and FHLB and owns the
requisite amount of stock of each as set forth on AFC Disclosure
Schedule 5.2.2.
5.2.3 AFC
Disclosure Schedule 5.2.3 sets forth each AFC Subsidiary and its jurisdiction
of
incorporation or organization. Each AFC Subsidiary is a corporation, limited
liability company or other legal entity as set forth on AFC Disclosure Schedule
5.2.3, duly organized, validly existing and in good standing under the laws
of
its jurisdiction of incorporation or organization. Each AFC Subsidiary 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 conduct
of
its business requires such qualification.
5.2.4 The
respective minute books of AFC and Alliance Bank accurately record all corporate
actions of their respective stockholders and boards of directors (including
committees).
5.2.5 Prior
to
the date of this Agreement, AFC has made available to BSFI true and correct
copies of the certificate of incorporation or articles of association, as
applicable, and bylaws of AFC and Alliance Bank and each other AFC
Subsidiary.
5.3 |
5.3.1 The
authorized capital stock of AFC consists of (i) 10,000,000 shares of AFC Common
Stock and (ii) 1,000,000 shares of preferred stock, $25.00 par value per share
(“AFC
Preferred Stock”
and
collectively with the AFC Common Stock, the “AFC
Stock”).
There
are (i) 3,565,012 shares of AFC Common Stock validly issued and outstanding,
fully paid and non-assessable and free of preemptive rights, (ii) 413,589 shares
of AFC Common Stock held by AFC as treasury stock, and (iii) no shares of AFC
Preferred Stock outstanding. Alliance Bank does not own, of record or
beneficially, any shares of AFC Stock, other than shares held as treasury stock.
Neither AFC nor any AFC Subsidiary has or is bound by any Rights or other
arrangements of any character relating to the purchase, sale or issuance or
voting of, or right to receive dividends or other distributions on, any capital
stock of AFC, or any other security of AFC or an AFC Subsidiary or any
securities representing the right to vote, purchase or otherwise receive any
capital stock of AFC or an AFC Subsidiary or any other security of AFC or any
AFC Subsidiary, other than shares of AFC Common Stock underlying the options
and
restricted stock granted pursuant to benefit plans maintained by AFC or issuable
pursuant to the AFC Shareholder Rights Plan. AFC has granted options to acquire
253,049 shares of AFC Common Stock. All shares of AFC Common Stock issuable
pursuant to option plans maintained by AFC will be duly authorized, validly
issued, fully paid and non-assessable when issued upon the terms and conditions
specified in the instruments pursuant to which they are issuable.
5.3.2 AFC
owns
all of the capital stock of each AFC Subsidiary free and clear of all liens,
security interests, pledges, charges, encumbrances, agreements and restrictions
of any kind or nature.
5.3.3 No
bonds,
debentures, notes or other indebtedness having the right to vote on any matters
on which AFC’s shareholders may vote have been issued by AFC and are
outstanding.
5.4.1 AFC
has
full corporate power and authority to execute and deliver this Agreement and,
subject to receipt of the required Regulatory Approvals described in
Section 8.3, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by AFC and the completion by AFC of the transactions contemplated hereby, up
to
and including the Merger, have been duly and validly approved by the Board
of
Directors of AFC, and no other corporate proceedings on the part of AFC are
necessary to complete the transactions contemplated hereby. This Agreement
has
been duly and validly executed and delivered by AFC, and subject to the receipt
of the Regulatory Approvals, approval by the stockholders of BSFI and the
shareholders of AFC, and due and valid execution and delivery of this Agreement
by BSFI, constitutes the valid and binding obligations of AFC, enforceable
against AFC 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)
Subject to compliance of BSFI with the terms and conditions of this Agreement,
the execution and delivery of this Agreement by AFC, subject to receipt of
the
Regulatory Approvals, and compliance by BSFI and AFC with any conditions
contained therein, and subject to the receipt of the approval of the
stockholders of BSFI, the consummation of the transactions contemplated hereby,
and (b) compliance by AFC 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 articles of association, as applicable, and
bylaws of AFC or any AFC Subsidiary; (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to AFC or any AFC Subsidiary; 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 or amendment 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 AFC or any AFC 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.
5.5 |
Except
for (a) the receipt of the Regulatory Approvals and compliance with any
conditions contained therein, (b) compliance with applicable requirements of
the
Securities Act, the Exchange Act and state securities or “blue sky” laws,
(c) the filing of the Certificate of Merger with the New York Department of
State and the Delaware Department of State, (d) the filing with the SEC of
(i) the Merger Registration Statement and (ii) such reports under
Sections 13(a), 13(d), 13(g) and 16(a) of the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated
hereby and the obtaining from the SEC of such orders as may be required in
connection therewith, (e) notification of the listing of AFC Common Stock
to be issued in the Merger on the NASDAQ National Market and (f) the
approval of this Agreement by the requisite vote of the stockholders of BSFI
and
the shareholders of AFC, no consents, waivers or approvals of, or filings or
registrations with, any Governmental Entity or Bank Regulator are necessary,
and, to the Knowledge of AFC, no consents, waivers or approvals of, or filings
or registrations with, any other third parties are necessary, in connection
with
(x) the execution and delivery of this Agreement by AFC and the completion
by AFC of the Merger or (y) the execution and delivery of the agreement and
plan of merger in respect of the Bank Merger and the completion of the Bank
Merger. AFC has no reason to believe that (i) any Regulatory Approvals or
other required consents or approvals will not be received or will include the
imposition of any condition or requirement that could reasonably be expected
by
AFC to result in a Material Adverse Effect on AFC and Alliance Bank, taken
as a
whole, or BSFI and Oswego County National Bank, taken as a whole, or that
(ii) any public body or authority having jurisdiction over affairs of AFC
and Alliance Bank, the consent or approval of which is not required or pursuant
to the rules of which a filing is not required, will object to the completion
of
the transactions contemplated by this Agreement.
5.6.1 The
AFC
Regulatory Reports have been prepared in all material respects in accordance
with applicable regulatory accounting principles and practices throughout the
periods covered by such statements, and fairly present in all material respects
the consolidated financial position, results of operations and changes in
shareholders’ equity of AFC as of and for the periods ended on the dates
thereof, in accordance with applicable regulatory accounting principles applied
on a consistent basis.
5.6.2 AFC
has
previously made available to BSFI the AFC Financial Statements covering periods
ended prior to the date hereof. The AFC Financial Statements have been prepared
in accordance with GAAP in all material respects, 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 AFC and the Alliance Bank 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.
5.6.3 At
the
date of the most recent consolidated statement of position included in the
AFC
Financial Statements, AFC 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 AFC 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 subject, in the case of any unaudited statements, to normal,
recurring audit adjustments and the absence of footnotes.
5.7 |
AFC
and
the AFC Subsidiaries are members of the same affiliated group within the meaning
of Code Section 1504(a). AFC, on behalf of itself and its Subsidiaries, has
timely filed or caused to be filed all material foreign, federal, state and
local income, franchise, excise, real and personal property and other Tax
returns and reports (including, but not limited to, those filed on a
consolidated, combined or unitary basis) required to have been filed by AFC
and
the AFC Subsidiaries prior to the date hereof, or requests for extensions to
file such returns and reports have been timely filed. All of the foregoing
returns and reports are true, correct, and complete. AFC and the AFC
Subsidiaries have timely paid or, prior to the Effective Time will pay, all
Taxes, whether or not shown on such returns or reports, due or claimed to be
due
to any Governmental Entity other than Taxes which are being contested in good
faith or for which adequate provision has been made on the AFC Financial
Statements. AFC and the AFC Subsidiaries have paid and will pay all installments
of estimated Taxes due on or before the Effective Time. AFC and the AFC
Subsidiaries have declared on their Tax returns all positions taken therein
that
could give rise to a substantial underpayment of United States Federal Income
Tax within the meaning of Section 6662 of the Code (or any corresponding
provision of state or local laws). AFC and the AFC Subsidiaries have paid or
made adequate provision in accordance with GAAP in the AFC SEC Reports and
the
AFC Financial Statements for all Taxes payable in respect of all periods ending
on or prior to the date of this Agreement and will have made or provided for
all
Taxes payable in respect of all periods ended on or prior to the Closing Date.
AFC and its Subsidiaries are subject to Tax audits in the ordinary course of
business and there is currently pending a New York State income tax audit with
respect to taxable years ended December 31, 2001, 2002 and 2003. AFC management
does not believe that an adverse resolution of any such audit would reasonably
be likely to have a Material Adverse Effect on AFC. AFC and the AFC Subsidiaries
have not been notified in writing by any jurisdiction that the jurisdiction
believes that AFC or any of the AFC Subsidiaries were required to file any
Tax
return that was not filed. The AFC Subsidiaries have not been a member of a
group with which they have filed or been included in a combined, consolidated
or
unitary income Tax return other than a group the common parent of which was
AFC.
As of the date hereof, all deficiencies proposed as a result of any audits
have
been paid or settled. There are no claims or assessments pending against AFC
or
any AFC Subsidiary for any alleged deficiency in any Tax, and neither AFC nor
any AFC Subsidiary has been notified in writing of any proposed Tax claims
or
assessments against AFC or any AFC Subsidiary. AFC and the AFC Subsidiaries
each
have complied with all applicable laws relating to the payment, collection
and
withholding of amounts on account of Taxes, have duly and timely withheld,
collected and paid over to the appropriate taxing authority all amounts required
to be so withheld and paid under all applicable laws, and have duly and timely
filed all Tax returns with respect to such withheld Taxes, within the time
prescribed under any applicable law. AFC and the AFC Subsidiaries have made
available to BSFI true and complete copies of all Tax returns of AFC and the
AFC
Subsidiaries for taxable periods ending within three (3) years of the date
of
this Agreement.
Neither
AFC nor any AFC Subsidiary has suffered any Material Adverse Effect since
December 31, 2005 and to AFC’s Knowledge, 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 AFC.
Subject
to any consents that may be required as a result of the transactions
contemplated by this Agreement, to its Knowledge neither AFC nor any AFC
Subsidiary is in material default 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.
5.10.1 AFC
and
each AFC Subsidiary has good and, as to real property, marketable title to
all
assets and properties owned by AFC or each AFC Subsidiary, as applicable, 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
most recent consolidated statement of financial condition contained in the
AFC
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 consolidated statement of financial condition),
subject to no 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 AFC,
inter-bank credit facilities, reverse repurchase agreements or any transaction
by a AFC Subsidiary acting in a fiduciary capacity, and (ii) statutory liens
for
amounts not yet delinquent or which are being contested in good faith. AFC
and
the AFC Subsidiaries, as lessee, have the right under valid and existing leases
of real and personal properties used by AFC and the AFC 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 AFC Financial Statements.
5.10.2 AFC
and
each AFC Subsidiary currently maintain insurance considered by each of them
to
be reasonable for their respective operations. Neither AFC nor any AFC
Subsidiary, has received notice from any insurance carrier on or before the
date
hereof 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. Except as listed on AFC Disclosure
Schedule 5.10.2, there are presently no claims pending under such policies
of
insurance and no notices of claim have been given by AFC or any AFC Subsidiary
under such policies. All such insurance is valid and enforceable and in full
force and effect (other than insurance that expires in accordance with its
terms), and within the last three years AFC and each AFC Subsidiary has received
each type of insurance coverage for which it has applied and during such periods
has not been denied indemnification for any claims submitted under any of its
insurance policies. AFC Disclosure Schedule 5.10.2 identifies all policies
of
insurance maintained by AFC and each AFC Subsidiary, including the name of
the
insurer, the policy number, the type of policy and any applicable deductibles,
as well as the other matters required to be disclosed under this Section 5.10.2.
AFC has made available to BSFI copies of all of the policies listed on AFC
Disclosure Schedule 5.10.2.
5.11 |
Except
as
disclosed in Item 3 of Part I of AFC’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2005 filed with the SEC on March 14, 2006, neither
AFC
nor any AFC Subsidiary is a party to any, and there are no pending or, to the
Knowledge of AFC, threatened, legal, administrative, arbitration or other
proceedings, claims (whether asserted or unasserted), actions or governmental
investigations or inquiries of any nature (i) against AFC or any AFC
Subsidiary, (ii) to which AFC’s or any AFC 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 would reasonably
be expected to adversely affect the ability of AFC or any AFC Subsidiary to
perform under this Agreement.
Except
as
set forth on AFC Disclosure Schedule 5.12:
5.12.1 To
AFC’s
Knowledge, AFC and each AFC 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, its conduct of business
and
its relationship with its employees, including, without limitation, the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001, the Equal Credit Opportunity Act, the Truth
in Lending Act, the Real Estate Settlement Procedures Act, the Consumer Credit
Protection Act, the Fair Credit Reporting Act, the Fair Debt Collections 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 AFC nor
any AFC Subsidiary has received any written notice to the contrary.
5.12.2 AFC
and
each AFC Subsidiary has all material permits, licenses, authorizations, orders
and approvals of, and has made all filings, applications and registrations
with,
all Governmental Entities and 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
AFC,
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.
5.12.3 For
the
period beginning January 1, 2004, neither AFC nor any AFC Subsidiary has
received any written notification or any other communication from any Bank
Regulator or Insurance Regulator (i) asserting that AFC or any AFC Subsidiary
is
not in material compliance with any of the statutes, regulations or ordinances
which such Bank Regulator or Insurance Regulator enforces; (ii) threatening
to
revoke any license, franchise, permit or governmental authorization; (iii)
requiring or threatening to require AFC or any AFC Subsidiary, or indicating
that AFC or any AFC 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 insurance agencies, or engages in the
insurance of bank deposits, restricting or limiting, or purporting to restrict
or limit the operations of AFC or any AFC Subsidiary, including without
limitation any restriction on the payment of dividends; or (iv) directing,
restricting or limiting, or purporting to direct, restrict or limit the
operations of AFC or any AFC Subsidiary. Neither AFC nor any BSFI Subsidiary
has
consented to or entered into any Regulatory Agreement that is currently in
effect. The most recent regulatory rating given to Alliance Bank as to
compliance with the CRA is satisfactory or better.
5.13.1 All
AFC
Benefit Plans are in material compliance with (and have been managed and
administrated in accordance with) the applicable terms of ERISA, the Code and
any other applicable laws. Except as set forth on AFC Disclosure Schedule
5.13.1, each AFC Benefit Plan governed by ERISA that is intended to be a
qualified retirement plan under Section 401(a) of the Code has either (i)
received a favorable determination letter from the IRS (and AFC is not aware
of
any circumstances likely to result in revocation of any such favorable
determination letter) or timely application has been made therefore, or (ii)
is
maintained under a prototype plan which has been approved by the IRS and is
entitled to rely upon the IRS National Office opinion letter issued to the
prototype plan sponsor. To the Knowledge of AFC and the AFC Subsidiaries, there
exists no fact which would adversely affect the qualification of any of the
AFC
Benefit Plans intended to be qualified under Section 401(a) of the Code, or
any
threatened or pending claim against any of the AFC Benefit Plans or their
fiduciaries by any participant, beneficiary or Governmental Entity.
5.13.2 Except
as
set forth on AFC Disclosure Schedule 5.13.2, no “defined benefit plan” (as
defined in Section 414(j) of the Code) has been maintained at any time by AFC
or
any of its ERISA Affiliates for the benefit of the employees or former employees
of AFC or its Subsidiaries.
5.13.3 Within
the last six years, neither AFC nor any of its ERISA Affiliates maintained
or
had any obligation to contribute to a AFC Benefit Plan which is a “multiemployer
plan” within the meaning of Section 3(37) of ERISA, and within the last six
years neither AFC nor any of its ERISA Affiliates has incurred any withdrawal
liability within the meaning of Section 4201 of ERISA to any such “multiemployer
plan.” Neither AFC nor any of its ERISA Affiliates has incurred any unsatisfied
liability (other than PBGC premiums) to the PBGC, the IRS or any other
individual or entity under Title IV of ERISA or Section 412 of the Code, and
no
event or condition exists that could reasonably be expected to result in the
imposition of any liability on AFC or any of its ERISA Affiliates under such
provisions or that could reasonably be expected to have an adverse effect on
AFC
or any of its ERISA Affiliates.
5.13.4 AFC
has
complied in all material respects with the notice and continuation requirements
of Parts 6 and 7 of Subtitle B of Title I of ERISA and Section 4980B of the
Code, and the regulations thereunder. To AFC’s Knowledge, all reports,
statements, returns and other information required to be furnished or filed
with
respect to AFC Benefit Plans have been timely furnished, filed or both in
accordance with Sections 101 through 105 of ERISA and Sections 6057 through
6059
of the Code, and they are true, correct and complete. To AFC’s Knowledge,
records with respect to AFC Benefit Plans have been maintained in compliance
with Section 107 of ERISA. To AFC’s Knowledge, neither AFC nor any other
fiduciary (as that term is defined in Section 3(21) of ERISA) with respect
to
any of AFC Benefit Plans has any liability for any breach of any fiduciary
duties under Sections 404, 405 or 409 of ERISA.
5.13.5 AFC
has
not, with respect to any of AFC Benefit Plans, nor, to AFC’s Knowledge, has any
administrator of any of AFC Benefit Plans, the related trusts or any trustee
thereof, engaged in any prohibited transaction which would subject AFC, any
ERISA Affiliate of AFC, any of AFC Benefit Plans, any administrator or trustee
or any party dealing with any of AFC Benefit Plans or any such trusts, to a
Tax
or penalty on prohibited transactions imposed by ERISA, Section 4975 of the
Code, or to any other liability under ERISA.
5.13.6 Other
than as reflected in the AFC Financial Statements, AFC has no liability for
retiree health and life benefits under any of AFC Benefit Plans.
5.13.7 Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (A) result in any payment (including
severance or unemployment compensation) becoming due to any director or any
employee of AFC from AFC under any AFC Benefit Plan, (B) increase any benefits
otherwise payable under any AFC Benefit Plan or (C) result in any acceleration
of the time of payment or vesting of any such benefit.
5.13.8 The
actuarial present values of all accrued deferred compensation entitlements
(including entitlements under any executive compensation, supplemental
retirement, or employment agreement) of employees and former employees of AFC
and their respective beneficiaries, other than entitlements accrued pursuant
to
funded retirement plans subject to the provisions of Section 412 of the Code
or
Section 302 of ERISA, have been fully reflected on the AFC Financial Statements
to the extent required by and in accordance with GAAP.
5.13.9 There
is
not, and has not been, any trust or fund maintained by or contributed to by
AFC
or its employees to fund an employee benefit plan which would constitute a
Voluntary Employees’ Beneficiary Association or a “welfare benefit fund” within
the meaning of Section 419(a) of the Code.
5.13.10 No
claim,
lawsuit, arbitration or other action has been asserted or instituted or, to
the
Knowledge of AFC, has been threatened or is anticipated, against any AFC Benefit
Plan (other than routine claims for benefits and appeals of such claims), AFC
or
any AFC Subsidiary or any director, officer or employee thereof, or any of
the
assets of any trust of any AFC Benefit Plan.
Except
with respect to the retention of Xxxxx, Xxxxxxxx & Xxxxx, Inc., neither AFC
nor any AFC 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.
5.15.1 Except
as
may be set forth in AFC Disclosure Schedule 5.15, with respect to AFC and each
AFC Subsidiary:
(A) Each
of
AFC and the AFC Subsidiaries, and to the Knowledge of AFC and the AFC
Subsidiaries, the AFC Loan Properties (as defined in Section 5.15.2) are in
material compliance with, and are not liable under, any Environmental
Laws;
(B) Neither
AFC nor any AFC Subsidiary has received written notice that there is any
material suit, claim, action, demand, executive or administrative order,
directive, request for information, investigation or proceeding pending, which
liability or obligation would have or would reasonably be expected to have
a
Material Adverse Effect and, to the Knowledge of AFC and the AFC Subsidiaries,
no such action is threatened, before any court, governmental agency or other
forum against them or any AFC Loan Property (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 AFC, any of the AFC Subsidiaries
or
on or at a Loan Property;
(C) To
the
Knowledge of AFC and the AFC Subsidiaries, the properties currently owned or
operated by AFC or any AFC 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 in amounts permitted under applicable
Environmental Law;
(D) To
the
Knowledge of AFC and the AFC Subsidiaries, there are no underground storage
tanks on, in or under any properties owned or operated by AFC or any of the
AFC
Subsidiaries or, any AFC Loan Property, and no underground storage tanks have
been closed or removed from any properties owned or operated by AFC or any
of
the AFC Subsidiaries or any AFC Loan Property, except as in compliance with
Environmental Law; and
(E) During
the period of (a) AFC’s or any of the AFC Subsidiaries’ ownership or operation
of any of their respective current properties or (b) AFC’s or any of the AFC
Subsidiaries’ participation in the management of any AFC Loan Property, to the
Knowledge of AFC and the AFC Subsidiaries, there has been no material
contamination by or material release of Materials of Environmental Concern
in,
on, under or affecting such properties. To the Knowledge of AFC and the AFC
Subsidiaries, prior to the period of (x) AFC’s or any of the AFC Subsidiaries’
ownership of operation of any of their respective current properties or (y)
AFC’s or any of the AFC Subsidiaries’ participation in the management of any AFC
Loan Property, there was no contamination by or release of Materials of
Environmental Concern in, on, under or affecting such properties.
(F) Neither
AFC nor any other AFC Subsidiary has conducted any environmental studies during
the past five (5) years (other than Phase I studies or Phase II studies which
did not indicate any contamination of the environment by Materials of
Environmental Concern above reportable levels) with respect to any properties
owned or leased by it or any of its Subsidiaries, or with respect to any AFC
Loan Property.
5.15.2 For
purposes of this Section 5.15, “AFC
Loan Property”
means
any property in which AFC or a AFC Subsidiary holds a direct or indirect
security interest securing to a loan or other extension of credit made by them,
including through a Loan Participation, and “AFC
Loan Participation”
means
a
participation interest in a loan or other extension of credit other than by
AFC
or a AFC Subsidiary.
AFC
and
each AFC Subsidiary owns or, to AFC’s Knowledge, possesses valid and binding
licenses and other rights (subject to expirations in accordance with their
terms) to use all patents, copyrights, trade secrets, trade names, computer
software, service marks and trademarks used in its respective business, each
without payment, and neither AFC nor any AFC Subsidiary has received any notice
of breach or conflict with respect thereto that asserts the rights of others.
AFC and each AFC Subsidiary 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.
5.17 |
Duties
as Fiduciary.
|
Alliance
Bank has performed all of its duties in a “fiduciary capacity” in a fashion that
complied with all applicable laws, regulations, orders, agreements, xxxxx,
instruments, and common law standards in effect at that time. Alliance Bank
has
not received notice of any claim, allegation, or complaint from any person
that
Alliance Bank failed to perform these duties in a manner that complied with
all
applicable laws, regulations, orders, agreements, xxxxx, instruments, and common
law standards, except for notices involving matters that have been resolved
and
any cost of such resolution is reflected in AFC’s Financial Statements.
5.18 |
Employees;
Labor Matters.
|
There
are
no labor or collective bargaining agreements to which AFC or any AFC Subsidiary
is a party. There is no union organizing effort pending or, to the Knowledge
of
AFC, threatened against AFC or any AFC Subsidiary. There is no labor strike,
labor dispute (other than routine employee grievances that are not related
to
union employees), work slowdown, stoppage or lockout pending or, to the
Knowledge of AFC, threatened against AFC or any AFC Subsidiary. There is no
unfair labor practice or labor arbitration proceeding pending or, to the
Knowledge of AFC, threatened against AFC or any AFC Subsidiary (other than
routine employee grievances that are not related to union employees). AFC and
each AFC Subsidiary is in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and are not engaged in any unfair labor practice. Neither
AFC
nor any AFC Subsidiary is a party to, or bound by, any agreement for the leasing
of employees.
The
information relating to AFC and any AFC Subsidiary to be contained in the Merger
Registration Statement, or in any other document filed with any Bank Regulator
or other Governmental Entity 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.
Since
January 1, 2003, AFC has filed with the SEC all forms, reports, schedules,
registration statements, definitive proxy statements and information statements
or other filings (“AFC
SEC Reports”)
required to be filed by it with the SEC. As of their respective dates, the
AFC
SEC Reports complied as to form with the requirements of the Exchange Act or
the
Securities Act, as applicable, and the applicable rules and regulations of
the
SEC promulgated thereunder in all material respects. As of their respective
dates and as of the date any information from the AFC SEC Reports has been
incorporated by reference, the AFC SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein made, in light of
the
circumstances under which they were made, not misleading. AFC has filed
all material contracts, agreements and other documents or instruments required
to be filed as exhibits to the AFC SEC Reports.
5.21 |
None
of
AFC or any AFC Subsidiary’s records, systems, controls data or information are
recorded, stored, maintained, operated or otherwise wholly or partly dependent
on or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access
thereto and therefrom) are not under their exclusive ownership and direct
control. AFC has devised and maintains a system of internal accounting controls
sufficient to provide reasonable assurances regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and the
applicable provisions of the Securities Act or the Exchange Act.
5.22 |
American
Jobs Creation Act.
|
AFC
and
each AFC Subsidiary has taken, or will take, any and all actions necessary
to
comply with the provisions of the American Jobs Creation Act of 2004, and all
rules and regulations promulgated thereunder, that are currently in effect
or
that become effective prior to the Closing Date and are required to be complied
with prior to Closing; provided, however, that until IRS regulations are
promulgated under Section 409A of the Code, AFC and each AFC Subsidiary shall
only be required to make good faith efforts to comply with Section 409A of
the
Code and the regulations proposed thereunder.
5.23 |
The
shares of AFC 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.
ARTICLE
VI
COVENANTS
OF BSFI
6.1 |
Conduct
of Business.
|
6.1.1 Affirmative
Covenants.
(A)
During
the period from the date of this Agreement to the Effective Time, except with
the written consent of AFC, which consent will not be unreasonably withheld,
conditioned or delayed, BSFI will, and it will cause each BSFI Subsidiary to:
operate its business only in the usual, regular and ordinary course of business;
use commercially reasonable efforts to preserve intact its business organization
and assets and maintain its rights and franchises; and voluntarily take no
action which would: (i) materially adversely affect the ability of the
parties to obtain the Regulatory Approvals or materially increase the period
of
time necessary to obtain the Regulatory Approvals, (ii) materially
adversely affect its ability to perform its covenants and agreements under
this
Agreement or (iii) result in the representations and warranties contained
in Article IV 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.
(B) In
the
event the actual costs of the branch construction project disclosed on BSFI
Disclosure Schedule 6.1.2(S) exceed 105% of the budgeted costs set forth on
such
schedule, BSFI will negotiate in good faith with AFC an equitable reduction
to
the cash portion of the Merger Consideration.
6.1.2 Negative
Covenants.
BSFI
agrees that from the date of this Agreement to the Effective Time, except as
otherwise specifically permitted or required by this Agreement or consented
to
by AFC in writing, it will not, and it will cause each of the BSFI Subsidiaries
not to:
(A) change
or
waive any provision of its certificate of incorporation (or articles of
association in the case of Oswego County National Bank) or bylaws, except as
required by law;
(B) change
the number of authorized or issued shares of its capital stock, issue any shares
of BSFI 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 BSFI Stock Option Plans or
the
BSFI Restricted Stock Plans, or split, combine or reclassify any shares of
capital stock, or declare, set aside or pay any dividend or other distribution
in respect of capital stock, or redeem or otherwise acquire any shares of
capital stock, except that BSFI (i) may issue shares of BSFI Common Stock upon
the valid exercise, in accordance with the information set forth in BSFI
Disclosure Schedule 4.3.1, of presently outstanding BSFI Options issued
under the BSFI Stock Option Plans, (ii) may permit the vesting of awards
previously made under the BSFI Restricted Stock Plans, (iii) shall continue
to declare and pay regular quarterly cash dividends of no more than $0.09 per
share with payment and record dates consistent with past practice (provided
that
the declaration of the last quarterly dividend by BSFI prior to the Effective
Time and the payment thereof shall be coordinated with AFC so that holders
of
BSFI Common Stock do not receive dividends on both BSFI Common Stock and AFC
Common Stock received in the Merger in respect of such quarter or fail to
receive a dividend on at least one of the BSFI Common Stock or AFC Common Stock
received in the Merger in respect of such quarter) and (iv) any BSFI 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 material contract or
agreement (including without limitation any settlement agreement with respect
to
litigation) except in the ordinary course of business or as contemplated by
this
Agreement;
(D) make
application for the opening or closing of any, or open or close any, branch
or
automated banking facility;
(E) 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, employees or consultants, except
(i) as may be required pursuant to commitments existing on the date hereof
and set forth on BSFI Disclosure Schedules 4.9.1 and 4.13.1 or as required
pursuant to Section 7.9 of this Agreement, (ii) for salary adjustments
in the ordinary course of business consistent with past practice provided that
any increases to such amounts shall not exceed four percent (4%) in the
aggregate, (iii) payment of retention bonuses as mutually agreed upon by
AFC and BSFI or (iv) as otherwise contemplated by this Agreement. Neither
BSFI nor any BSFI Subsidiary shall hire or promote any employee to a rank having
a title of vice president or other more senior rank or hire any new employee
at
an annual rate of compensation in excess of $50,000; provided,
however,
that a
BSFI Subsidiary may hire at-will, non-officer employees at an annual
compensation rate not to exceed $50,000 to fill vacancies that may from time
to
time arise in the ordinary course of business; provided,
further,
that
that neither BSFI or any BSFI Subsidiary shall hire any new employee without
first seeking to fill any position internally and, failing that, through the
use
of temporary personnel. Neither BSFI nor or any BSFI Subsidiary shall pay
expenses of any employee or director for attending conventions or similar
meetings held after the date hereof;
(F) enter
into or, except as may be required by law, 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;
(G) merge
or
consolidate BSFI or any BSFI Subsidiary with any other Person; sell or lease
all
or any substantial portion of the assets or business of BSFI or any BSFI
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
BSFI
or Oswego County National Bank and any other Person; enter into a purchase
and
assumption transaction with respect to deposits and liabilities; incur deposit
liabilities, other than liabilities incurred in the ordinary course of business
consistent with past practice and in keeping with prevailing competitive rates;
permit the revocation or surrender by any Oswego County National Bank 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;
(H) sell
or
otherwise dispose of the capital stock of BSFI or sell or otherwise dispose
of
any asset of BSFI or of any BSFI Subsidiary other than in the ordinary course
of
business consistent with past practice; except for transactions with the FHLB,
subject any asset of BSFI or of any BSFI Subsidiary to a lien, pledge, security
interest or other encumbrance (other than in connection with deposits,
repurchase agreements, bankers acceptances, pledges in connection with
acceptance of governmental deposits, 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;
(I) take
any
action which would result in any of the representations and warranties of BSFI
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;
(J) change
its 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
regulatory accounting principles or by any Bank Regulator responsible for
regulating BSFI or Oswego County National Bank;
(K) waive,
release, grant or transfer any rights of value or modify or change any existing
agreement or indebtedness to which BSFI or any BSFI Subsidiary is a
party;
(L) purchase
any securities except securities (i) rated “A” or higher by either Standard
& Poor’s Ratings Services or Xxxxx’x Investors Service, (ii) having a
face amount in the aggregate of not more than $500,000, (iii) with a
weighted average life of not more than four (4) years and (iv) otherwise in
the ordinary course of business consistent with past practice;
(M) except
as
specifically provided below, and except for commitments issued prior to the
date
of this Agreement which have not yet expired and which have been disclosed
on
BSFI Disclosure Schedule 6.1.2(M) (which schedule need not include any
individual commitment which is less than $50,000 in amount provided that such
schedule includes the aggregate amount of individual commitments which are
less
than $50,000 that have been excluded from the schedule), and except for the
renewal of existing lines of credit, (i) make or acquire any new loan or other
credit facility commitment (including without limitation, loan participations,
lines of credit and letters of credit) other than in the ordinary course of
business consistent with past practice or (ii) make or acquire any new loan
or issue any commitment for any new loan with a principal amount of $750,000
or
more without the prior consent of AFC; provided that such consent shall be
deemed to have been granted if AFC does not object within three (3) business
days of receipt of notice from BSFI or its intent to make such
loan;
(N) enter
into, renew, extend or modify any other transaction (other than a deposit
transaction) with any Affiliate;
(O) enter
into any futures contracts, options, interest rate caps, interest rate floors,
interest rate exchange agreements or other agreements 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;
(P) except
for the execution of this Agreement, and actions taken or which will be taken
in
accordance with this Agreement and performance hereunder, take any action that
would give rise to a right of payment to any individual under any employment
agreement;
(Q) 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 banking policies except as may be required
by changes in applicable law or regulations, GAAP or regulatory accounting
principles or by a Bank Regulator;
(R) except
for the execution of this Agreement, and the transactions contemplated herein,
take any action that would give rise to an acceleration of the right to payment
to any individual under any BSFI Benefit Plan;
(S) make
any
capital expenditures in excess of $25,000 individually or $50,000 in the
aggregate, other than pursuant to binding commitments existing on the date
hereof which are set forth on BSFI Disclosure Schedule 6.1.2(S) which
includes the budget for each such pre-existing commitment.
(T) 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;
(U) except
for existing commitments to sell any participation interest in any loan, 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
AFC has been given the first opportunity and a reasonable time to purchase
any
loan participation being sold, or purchase any participation interest in any
loan other than purchases of participation interests from AFC;
(V) undertake
or enter into any lease, contract or other commitment for its account, other
than in the ordinary course of providing credit to customers as part of its
banking business, involving a payment by BSFI or any BSFI Subsidiary of more
than $50,000 annually, or containing any financial commitment extending beyond
twelve (12) months from the date hereof;
(W) 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 negative precedent for other
pending or potential claims, actions, litigation, arbitration or
proceedings;
(X) foreclose
upon or take a deed or title to any commercial real estate without first
conducting a Phase I environmental assessment of the property or foreclose
upon
any commercial real estate if such environmental assessment indicates the
presence of Materials of Environmental Concern;
(Y) purchase
or sell any mortgage loan servicing rights other than in the ordinary course
of
business consistent with past practice;
(Z) issue
any
broadly distributed communication of a general nature to employees (including
general communications relating to benefits and compensation) without prior
consultation with AFC and, to the extent relating to post-Closing employment,
benefit or compensation information without the prior consent of AFC (which
shall not be unreasonably withheld, conditioned or delayed) or issue any broadly
distributed communication of a general nature to customers without the prior
approval of AFC (which shall not be unreasonably withheld), except as required
by law or for communications in the ordinary course of business consistent
with
past practice that do not relate to the Merger or other transactions
contemplated hereby;
(AA) 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, BSFI will
cause one or more of its representatives to confer with representatives of
AFC
to inform AFC regarding BSFI’s operations at such times as AFC may reasonably
request. BSFI will promptly notify AFC of any significant change in the ordinary
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 threat of material litigation involving BSFI or any
BSFI
Subsidiary. Without limiting the foregoing, senior officers of AFC and BSFI
shall meet monthly to review the financial and operational affairs of BSFI
and
the BSFI Subsidiaries, and BSFI shall give due consideration to AFC’s input on
such matters, with the understanding that, notwithstanding any other provision
contained in this Agreement, neither AFC nor Alliance Bank shall under any
circumstance be permitted to exercise control of BSFI or any BSFI Subsidiary
prior to the Effective Time.
6.2.2 BSFI
and
AFC shall cooperate regarding a plan for the conversion of data processing
and
related electronic informational systems of BSFI to those used by AFC, which
planning shall include, but not be limited to, discussion of the possible
termination by BSFI 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 BSFI 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 BSFI shall not be
obligated to take any such action prior to the Effective Time and, unless BSFI
otherwise agrees and provided it is permitted by applicable law, no conversion
shall take place prior to the Effective Time. In the event that Oswego County
National Bank takes, at the request of Alliance Bank, any action relative to
third parties to facilitate the conversion that results in the imposition of
any
termination fees or charges, Alliance Bank shall indemnify Oswego County
National Bank for any such fees and charges, and the cost of reversing the
conversion process in an amount not to exceed $150,000, if for any reason the
Merger is not consummated for any reason other than a breach of this Agreement
by BSFI, or a termination of this Agreement under Sections 11.1.7, 11.1.8
or 11.1.9.
6.2.3 BSFI
shall provide AFC, within ten (10) 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) and impaired loans. On a monthly basis, BSFI shall provide
AFC with a schedule of all (x) loan grading changes and (y) loan
approvals, which schedule shall indicate the loan amount, loan type and other
material features of the loan. BSFI will promptly prepare and provide AFC with
the minutes of all BSFI and Oswego County National Bank officer and director
loan committee meetings.
6.2.4 BSFI
shall promptly inform AFC 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 BSFI or any BSFI Subsidiary under any labor or employment
law.
6.2.5 BSFI
shall keep AFC informed of the status of the construction of a new branch to
be
located on Xxxxx 000 Xxxx xx Xxxxxx, Xxx Xxxx. Such information shall include
an
update on actual project expenditures in relation to the budgeted cost of the
project.
6.3 |
Access
to Properties and Records.
|
Subject
to Section 12.1, BSFI shall permit AFC access upon reasonable notice to its
properties and those of the BSFI Subsidiaries, and shall disclose and make
available to AFC during normal business hours all of its books 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’ and stockholders’ meetings
(other than minutes that discuss any of the transactions contemplated by this
Agreement or any other subject matter that BSFI reasonably determines should
be
kept confidential), 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
AFC
may have a reasonable interest; provided,
however,
that
BSFI shall not be required to take any action that would provide access to
or to
disclose information where such access or disclosure, in BSFI’s reasonable
judgment, would interfere with the normal conduct of BSFI’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 contravene any
applicable law. BSFI shall provide and shall request its auditors to provide
AFC
with such historical financial information regarding it (and related audit
reports and consents) as AFC may reasonably request for Securities Law
disclosure purposes. AFC shall use commercially reasonable efforts to minimize
any interference with BSFI’s regular business operations during any such access
to BSFI’s property, books and records. BSFI and each BSFI Subsidiary shall
permit AFC, at its expense, to (i) cause a “Phase I environmental
assessment” and a “Phase II environmental assessment” to be performed at
any physical location owned or occupied by BSFI or any BSFI Subsidiary and
(ii)
cause an appraisal to be performed in respect of any real property owned by
BSFI
or any BSFI Subsidiary.
6.4 |
Financial
and Other Statements.
|
6.4.1 Promptly
upon receipt thereof, BSFI will furnish to AFC copies of each annual, interim
or
special audit of the books of BSFI and the BSFI Subsidiaries made by its
independent registered public accountants and copies of all internal control
reports submitted to BSFI by such accountants, or by any other accounting firm
rendering internal audit services, in connection with each annual, interim
or
special audit of the books of BSFI and the BSFI Subsidiaries made by such
accountants.
6.4.2 As
soon
as reasonably available, but in no event later than the date such documents
are
filed with the FRB, OCC or FDIC, BSFI will deliver to AFC the BSFI Regulatory
Report filed by BSFI or Oswego County National Bank. Within 15 days after the
end of each month, Oswego County National Bank will deliver to AFC a
consolidating balance sheet and a consolidating statement of operations, without
related notes, for such month prepared in accordance with current financial
reporting practices, as well as a month-end and year to date comparison to
budget.
6.4.3 BSFI
shall permit AFC to review substantially final drafts of its quarterly and
annual reports on Forms 10-Q and 10-K, respectively, at least two (2) business
days prior to the date such documents are filed with the SEC. As soon as
reasonably available, but in no event later than the date such documents are
filed with the SEC, BSFI will deliver to AFC the Securities Documents filed
by
it with the SEC under the Securities Laws. BSFI promptly will advise AFC of
BSFI’s receipt of any inquiry or examination report of any Bank Regulator or
Insurance Regulator with respect to the condition or activities of BSFI, Oswego
County National Bank or Xxxx’x, as applicable.
6.4.4 With
reasonable promptness, BSFI will furnish to AFC such additional financial data
that BSFI possesses and as AFC may reasonably request, including without
limitation, detailed monthly financial statements and loan reports and detailed
deposit reports.
6.5 |
Maintenance
of Insurance.
|
BSFI
shall use commercially reasonable efforts to maintain, and to cause the BSFI
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, with such coverage and in such
amounts not less than that currently maintained by BSFI and the BSFI
Subsidiaries and set forth in BSFI Disclosure Schedule 4.10.3. BSFI will
promptly inform AFC if BSFI or any BSFI Subsidiary receives notice from an
insurance carrier that (i) an insurance policy will be canceled or that
coverage thereunder will be reduced or eliminated, or (ii) premium costs
with respect to any policy of insurance will be substantially
increased.
6.6 |
Disclosure
Supplements.
|
From
time
to time prior to the Effective Time, BSFI will promptly supplement or amend
the
BSFI 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
BSFI Disclosure Schedule or which is necessary to correct any information in
such BSFI Disclosure Schedule which has been rendered materially inaccurate
thereby. No supplement or amendment to such BSFI 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.
|
BSFI
shall use its commercially reasonable efforts, and shall cause each BSFI
Subsidiary to use its commercially reasonable efforts, to obtain as soon as
practicable all consents and approvals of any other persons necessary for the
consummation of the transactions contemplated by this Agreement.
6.8 |
All
Reasonable Efforts.
|
Subject
to the terms and conditions herein provided, BSFI agrees to use, and agrees
to
cause each BSFI Subsidiary 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 under applicable laws and regulations to consummate the transactions
contemplated by this Agreement.
6.9 |
Failure
to Fulfill Conditions.
|
In
the
event that BSFI 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 AFC.
6.10 |
No
Solicitation.
|
From
and
after the date hereof until the termination of this Agreement, neither BSFI,
nor
any BSFI Subsidiary, nor any of their respective officers, directors, employees,
representatives, agents and affiliates (including, without limitation, any
investment banker, attorney or accountant retained by BSFI or any of the BSFI
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 BSFI shall notify AFC orally
and in writing (as promptly as practicable) of all of the relevant details
relating to all inquiries and proposals which BSFI or any of its Subsidiaries
or
any of their respective officers, directors or employees, or, to BSFI’s
Knowledge, investment bankers, financial advisors, attorneys, accountants or
other representatives of BSFI 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 BSFI from (i) complying with its disclosure 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 BSFI 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 BSFI’s shareholders from a financial point of view than the Merger;
(B) the Board of Directors of BSFI 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; (C) such Acquisition Proposal was not solicited by BSFI and
did not otherwise result from a breach of this Section 6.10 by BSFI (such
proposal that satisfies clauses (A), (B) and (C) being referred to herein
as a “Superior
Proposal”);
(D) BSFI promptly notifies AFC 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 BSFI 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; and (E) the BSFI 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 BSFI or any of its 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 BSFI
and
the BSFI 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 BSFI 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 |
Reserves
and Merger-Related Costs.
|
Prior
to
the Effective Time, each of BSFI and its Subsidiaries shall, consistent with
U.S. GAAP, the rules and regulations of the SEC and applicable banking laws
and
regulations, modify or change its loan, OREO, accrual, reserve, tax, litigation
and real estate valuation policies and practices (including loan classifications
and levels of reserves) so as to be applied on a basis that is consistent with
that of AFC, provided, however, that no such modifications or changes need
be
made prior to the satisfaction of the conditions set forth in
Sections 9.1.1 and 9.1.3; provided
further,
that in
any event, no accrual or reserve made by BSFI or any of its Subsidiaries
pursuant to this Section 6.11 shall constitute or be deemed to be a breach,
violation of or failure to satisfy any representation, warranty, covenant,
agreement, condition or other provision of this Agreement or otherwise be
considered in determining whether any such breach, violation or failure to
satisfy shall have occurred. The recording of any such adjustments shall not
be
deemed to imply any misstatement of previously furnished financial statements
or
information and shall not be construed as concurrence of BSFI or its management
with any such adjustments.
6.12 |
Board
of Directors and Committee
Meetings.
|
BSFI
and
the BSFI Subsidiaries shall permit one representative of AFC to attend any
meeting of their Board of Directors or the committees thereof, and shall permit
one representative of AFC to attend any meeting of their loan committee and
asset liability committee, as an observer (the “Observer”),
provided that neither BSFI nor any BSFI Subsidiary shall be required to permit
the Observer to remain present during any confidential discussion of this
Agreement and the transactions contemplated hereby or any Acquisition Proposal
or during any other matter that the respective Board of Directors has been
advised of by counsel that such attendance by the Observer may violate a
confidentiality obligation or fiduciary duty or any legal, regulatory or NASDAQ
requirements.
6.13 |
Transaction
Expenses of BSFI.
|
BSFI
has
provided at BSFI Disclosure Schedule 6.13 its estimated budget of
transaction-related expenses reasonably anticipated to be payable by BSFI in
connection with this transaction, including the fees and expenses of counsel,
accountants, investment bankers and other professionals (collectively,
“BSFI
Expenses”).
BSFI
shall use its best efforts to cause the aggregate amount of all BSFI Expenses
to
be less than the total expenses disclosed in BSFI Schedule 6.13. BSFI shall
cooperate with AFC in working to manage all services and related fees and
expenses related to the transactions contemplated by this Agreement.
6.14 |
Stock
Repurchase Plan; ESOP Loan
|
If
such
plan has not been suspended by the date hereof, the Board of Directors of BSFI,
or an appropriate committee thereof, shall promptly suspend the effectiveness
of
BSFI’s share repurchase plan (such suspension to be effective immediately upon
the execution and delivery of this Agreement by BSFI); subject to the occurrence
of the Effective Time, the BSFI ESOP shall be terminated immediately prior
to
and effective as of the Effective Time (all shares of BSFI Common Stock held
by
the ESOP shall be converted into the right to receive the Merger Consideration
as elected by the participants in the BSFI ESOP), all outstanding indebtedness
of the BSFI ESOP shall be repaid and the balance of the shares and any other
assets remaining in the BSFI ESOP not allocated to a participant’s account shall
be allocated and distributed to BSFI ESOP participants (subject to receipt
of a
favorable determination letter from the IRS). Prior to the Effective Time,
BSFI,
and following the Effective Time, AFC 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 BSFI ESOP and the proposed allocations
as
may be requested by the IRS as a condition to its issuance of a favorable
determination letter). BSFI and following the Effective Time, AFC, will adopt
such amendments to the BSFI ESOP to effect the provisions of this Section 6.13.
Prior to the Effective Time, BSFI shall take such actions in consultation with
AFC as are required to replace the existing trustees of the BSFI ESOP with
trustees as selected by AFC with such replacement to be effective as of the
Effective Time.
ARTICLE
VII
COVENANTS
OF AFC
7.1 |
Conduct
of Business.
|
7.1.1 Affirmative
Covenants.
(A) During
the period from the date of this Agreement to the Effective Time, except with
the written consent of BSFI, which consent will not be unreasonably withheld,
conditioned or delayed, AFC will, and it will cause each AFC Subsidiary to;
operate its business only in the usual, regular and ordinary course of business;
use commercially reasonable efforts to preserve intact its business organization
and assets and maintain its rights and franchises; and voluntarily take no
action which would: (i) materially 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) materially adversely affect
its ability to perform its covenants and agreements under this Agreement; or
(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.
(B) In
the
event the actual costs of the branch construction project disclosed on BSFI
Disclosure Schedule 6.1.2(S) exceed 105% of the budgeted costs set forth on
such
schedule, AFC will negotiate in good faith with BSFI an equitable reduction
to
the cash portion of the Merger Consideration.
(C) Promptly
after the Effective Time, AFC shall deposit, or shall cause to be deposited,
with the Exchange Agent the Exchange Fund.
7.1.2 Negative
Covenants.
AFC
agrees that from the date of this Agreement to the Effective Time, except as
otherwise specifically permitted or required by this Agreement or consented
to
by BSFI in writing, it will not, and it will cause each of the AFC Subsidiaries
not to:
(A) change
or
waive any provision of its certificate of incorporation (or articles of
association in the case of Alliance Bank) or bylaws, except as required by
law;
(B) change
the number of authorized or issued shares of its capital stock, issue any shares
of AFC 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, or split, combine or reclassify any shares of capital stock,
or
declare, set aside or pay any dividend or other distribution in respect of
capital stock, or redeem or otherwise acquire any shares of capital stock,
except that AFC (i) may issue shares of AFC Common Stock upon the valid exercise
of presently outstanding options, (ii) may permit the vesting of awards
previously made under the AFC’s restricted stock plan and (iii) may make stock
option and restricted stock awards and engage in other ordinary course
transactions in connection with its stock option and restricted stock
plans;
(C) merge
or
consolidate AFC or any AFC Subsidiary with any other Person; sell or lease
all
or any substantial portion of the assets or business of AFC or any AFC
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
AFC
or Alliance Bank and any other Person; enter into a purchase and assumption
transaction with respect to deposits and liabilities; incur deposit liabilities,
other than liabilities incurred in the ordinary course of business consistent
with past practice and in keeping with prevailing competitive rates;
(D) sell
or
otherwise dispose of the capital stock of AFC or sell or otherwise dispose
of
any asset of AFC or of any AFC Subsidiary other than in the ordinary course
of
business consistent with past practice; except for transactions with the FHLB,
subject any asset of AFC or of any AFC Subsidiary to a lien, pledge, security
interest or other encumbrance (other than in connection with deposits,
repurchase agreements, bankers acceptances, pledges in connection with
acceptance of governmental deposits, 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;
provided, however, that
AFC
may issue trust preferred securities;
(E) take
any
action which would result in any of the representations and warranties of AFC
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;
(F) change
its 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
regulatory accounting principles or by any Bank Regulator responsible for
regulating AFC or Alliance Bank;
(G) 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;
(H) 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 $250,000 individually or
$500,000 in the aggregate, and that does not create negative precedent for
other
pending or potential claims, actions, litigation, arbitration or
proceedings;
(I) agree
to
do any of the foregoing.
7.2 |
Current
Information and Consultation.
|
7.2.1 During
the period from the date of this Agreement to the Effective Time, AFC will
cause
one or more of its representatives to confer with representatives of BSFI to
inform BSFI regarding AFC’s operations at such times as BSFI may reasonably
request.
7.2.2 AFC
shall
promptly inform BSFI upon receiving notice of any material 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 AFC or any AFC Subsidiary under any labor
or employment law.
7.3 |
Financial
and Other Statements.
|
7.3.1 Promptly
upon receipt thereof, AFC will furnish to BSFI copies of each annual, interim
or
special audit of the books of AFC and the AFC Subsidiaries made by its
independent registered public accountants and copies of all written internal
control reports submitted to AFC by such accountants.
7.3.2 As
soon
as reasonably available, but in no event later than the date such documents
are
filed with the FRB, OCC or FDIC, AFC will deliver to BSFI the AFC Regulatory
Report filed by AFC or Alliance Bank. Within 15 days after the end of fiscal
quarter, Alliance Bank will deliver to BSFI a consolidated balance sheet and
a
consolidated statement of operations, without related notes, for such quarter
prepared in accordance with current financial reporting practices, as well
as a
quarter-end and year to date comparison to budget.
7.3.3 As
soon
as reasonably available, but in no event later than the date such documents
are
filed with the SEC, AFC will deliver to BSFI the Securities Documents filed
by
it with the SEC under the Securities Laws other than those Securities Documents
that are available publicly through the SEC’s XXXXX data base. AFC promptly will
advise BSFI of AFC’s receipt of any material inquiry or examination report of
any Bank Regulator with respect to the condition or activities of AFC or
Alliance Bank.
7.3.4 With
reasonable promptness, AFC will furnish to BSFI such additional financial data
that AFC possesses and as BSFI may reasonably request.
7.4 |
Maintenance
of Insurance.
|
AFC
shall
use commercially reasonably efforts to maintain, and to cause the AFC
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, with such coverage and in such
amounts not less than that currently maintained by AFC and the AFC Subsidiaries
and set forth in AFC Disclosure Schedule 5.10.2.
7.5 |
Disclosure
Supplements.
|
From
time
to time prior to the Effective Time, AFC will promptly supplement or amend
the
AFC 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
AFC Disclosure Schedule or which is necessary to correct any information in
such
AFC Disclosure Schedule which has been rendered inaccurate thereby. No
supplement or amendment to such AFC Disclosure Schedule shall have any effect
for the purpose of determining satisfaction of the conditions set forth in
Article IX.
7.6 |
Consents
and Approvals of Third
Parties.
|
AFC
shall
use its commercially reasonable efforts, and shall cause each AFC Subsidiary
to
use its commercially reasonable efforts, to obtain as soon as practicable all
consents and approvals of any other persons necessary for the consummation
of
the transactions contemplated by this Agreement.
7.7 |
All
Reasonable Efforts.
|
Subject
to the terms and conditions herein provided, AFC agrees to use and agrees to
cause each AFC Subsidiary 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 under applicable laws and regulations to consummate the transactions
contemplated by this Agreement.
7.8 |
Failure
to Fulfill Conditions.
|
In
the
event that AFC 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 BSFI.
7.9 |
Employee
Benefits.
|
7.9.1 Definition.
“Benefit
Plan Determination Date”
for
purposes of this Section shall mean that date selected by AFC with respect
to each BSFI Benefit Plan to be terminated or replaced with a similar plan
or
program provided by AFC or Alliance Bank (as used in this Section, AFC and
Alliance Bank are collectively referred to as “AFC”) to other employees
similarly situated; provided, that, the definition of “Benefit
Plan Determination Date”
shall
be consistent with the premise that the compensation, employee benefits and
terms and conditions of employment that are provided by AFC after the Closing
Date to Current BSFI Employees shall only be substantially similar, in the
aggregate, to those provided by AFC to similarly situated employees of
AFC.
7.9.2 General
Rule: Parity in Benefits; No Gaps.
Within
a reasonable period after the Closing Date, but not before the applicable
Benefit Plan Determination Date, AFC shall provide or shall cause to be provided
by a Subsidiary of AFC, to all individuals who are employees of BSFI or any
BSFI
Subsidiary at the Closing Date and whose employment continues following the
Effective Time and who are then eligible for a respective BSFI Benefit Plan
(the
“Current
BSFI Employees”),
compensation, employee benefits and terms and conditions of employment that
are
substantially similar, in the aggregate, to those provided by AFC to similarly
situated employees of AFC. Notwithstanding any of the foregoing to the contrary,
none of the provisions contained herein shall (i) operate to duplicate any
benefit provided to any Current BSFI Employees or the funding of any such
benefit, (ii) be construed to limit the ability of AFC to review employee
benefit plans, programs and arrangements from time to time, to make such changes
as AFC deems appropriate in its sole and absolute discretion or to terminate
such employee benefit plans, programs and arrangements and (iii) limit AFC’s
ability to freeze or terminate, in the sole discretion of AFC, BSFI’s defined
benefit retirement plan. AFC will waive all pre-existing condition limitations
and proof of insurability provisions (to the extent such limitations and
provisions did not apply to a pre-existing condition under BSFI’s equivalent
plan) and eligibility waiting periods under such plans that would otherwise
be
applicable to newly-hired employees for all Current BSFI Employees; provided
that nothing in this sentence shall limit the ability of AFC to amend or enter
into new or different employee benefit plans or arrangements provided such
plans
or arrangements treat the Current BSFI Employees in a substantially similar
manner as employees of AFC are treated. AFC will honor under such plans any
deductible, co-payment and out-of-pocket expenses incurred by the Current BSFI
Employees and their covered dependents during the portion of the plan year
prior
to the relevant Benefit Plan Determination Date.
With
respect to any Non-qualified Deferred Compensation Plan listed on BSFI
Disclosure Schedule 4.13.1 which is continued following the Effective Time,
AFC
will use its best efforts to take any and all actions necessary to materially
comply with the provisions of the American Jobs Creation Act of 2004, and all
rules and regulations promulgated thereunder, that are currently in effect
or
that become effective after Closing and are required to be complied with
following Closing; provided, however, that until IRS regulations are promulgated
under Section 409A of the Code, AFC shall be required to make good faith efforts
to comply with Section 409A of the Code and the regulations proposed
thereunder.
7.9.3 AFC
401(k) Plan Participation.
Each
Current BSFI Employee who continues in the employment of BSFI or any BSFI
Subsidiary until the Closing Date, shall be eligible to participate in AFC’s
401(k) Plan on the day after the Benefit Plan Determination Date for the BSFI’s
401(k) Plan. All rights to participate in AFC’s 401(k) Plan are subject to AFC’s
right to amend or terminate AFC’s 401(k) Plan in its sole and absolute
discretion and are subject to the terms of AFC’s 401(k) Plan including, but not
limited to, the eligibility and vesting provisions of such plan. For purposes
of
administering AFC’s 401(k) Plan, service with BSFI or a BSFI Subsidiary shall be
deemed to be service with AFC for eligibility and vesting purposes only, but
not
for purposes of benefit accrual or the allocation of employer contributions.
To
the extent the BSFI 401(k) Plan is terminated at the request of AFC in
accordance herewith, AFC’s 401(k) plan shall accept direct rollovers from the
BSFI 401(k) Plan, to the extent permissible under the Code and ERISA, at the
Benefit Plan Determination Date or as soon as administratively feasible
thereafter, a direct rollover including any participant loan.
7.9.4 Employee
Stock Ownership Plan.
AFC
agrees to take all such actions related to the BSFI ESOP as stated in Section
6.14 of this Agreement.
7.9.5 Welfare
Benefits.
Each
Current BSFI Employee shall be eligible to participate in group hospitalization,
medical, dental, life, disability and other welfare benefit plans and programs
available to employees of AFC similarly situated, subject to the terms of such
plans and programs, as of the Benefit Plan Determination Date for each such
plan
or program, conditional upon the Current BSFI Employee’s being employed by AFC
as of such Benefit Plan Determination Date and subject to complying with
eligibility requirements of the respective plans and programs. With respect
to
any welfare benefit plan or program of BSFI that AFC determines, in its sole
and
absolute discretion, provides benefits of the same type or class as a
corresponding plan or program maintained by AFC, AFC shall continue such BSFI
plan or program in effect for the benefit of the Current BSFI Employees so
long
as they remain eligible to participate and until they shall become eligible
to
become participants in the corresponding plan or program maintained by AFC
(and,
with respect to any such plan or program, subject to complying with eligibility
requirements and subject to the right of AFC to terminate or amend such plan
or
program). For purposes of all employee welfare benefit plans, programs and
agreements maintained by or contributed to by AFC, AFC shall cause each such
plan, program or arrangement to treat the service with BSFI prior to the Closing
Date of any Current BSFI Employee (to the same extent such service is recognized
under analogous plans, programs or arrangements of BSFI prior to the Closing)
as
service rendered to AFC for all purposes; provided, however, that such crediting
of service shall not operate to duplicate any benefit or the funding of such
benefit available to any Current BSFI Employee.
7.9.6 Paid
Time Off Programs.
AFC
will give each Current BSFI Employee credit, for purposes of AFC’s vacation
and/or other paid leave benefit programs, for such Current BSFI Employees’
accrued and unpaid vacation and/or paid leave balance with BSFI as of the
Closing Date.
7.9.7 AFC
to Honor Agreements.
AFC
agrees to honor all change in control agreements, severance agreements, deferred
compensation agreements and consulting agreements that BSFI has with its current
and former employees and which have been identified in BSFI Disclosure
Schedule 4.9.1, except to the extent any such agreements shall be
superseded or terminated at the Closing Date or following the Closing Date
with
the written consent of the affected parties or to the extent such agreements
may
need to be amended in order to comply with IRS guidance on the requirements
of
Code Section 409A at or after the Closing Date. BSFI shall use its best
efforts to obtain from each of the individuals named in BSFI Disclosure
Schedule 7.9.7 an agreement (a “Settlement
Agreement”)
to
accept in full settlement of his or her rights under the specified programs
the
amounts and benefits determined under his or her Settlement Agreement (the
aggregate amount of such payment is to be specified in BSFI Disclosure
Schedule 7.9.7) and pay such amounts to such individuals who are employed
at the Effective Time. As to, and only as to, each individual who enters into
Settlement Agreement, AFC acknowledges and agrees that (i) the Merger
constitutes a “change of control” or “change in control” for all purposes
pursuant to such agreements, plans and arrangements; and (ii) in light of AFC’s
plans relating to management assignments and responsibilities with respect
to
the business of AFC from and after the Effective Time, each officer or employee
who is a party to, or is otherwise subject to, any such agreement will, upon
consummation of the Merger, be considered to have terminated employment
thereunder and receive the severance or other similar benefits as if there
was a
termination of employment for “good reason,” “involuntary termination,”
constructive discharge, (including, but not limited to, demotion or reduction
in
compensation) or other similar events, regardless of whether such termination
of
employment has occurred or subsequently occurs.
Except
for the agreements described in the preceding sentences of this
Section 7.9.7 and except as otherwise provided in this Agreement, the BSFI
Benefit Plans shall, in the sole and absolute discretion of AFC, be frozen,
terminated or merged into comparable plans of AFC, effective at such time as
AFC
shall determine in its sole and absolute discretion but not before the
applicable Benefit Plan Determination Date.
7.9.8 No
Guarantee of Employment.
Except
to the extent of commitments herein or other contractual commitments, if any,
specifically made or assumed by AFC hereunder or by operation of law, AFC shall
have no obligation arising from and after the Closing Date to continue in its
employ or in any specific job or to provide to any specified level of
compensation or any incentive payments, benefits or perquisites to any person
who is an employee of BSFI as of the Closing Date. Each person who is an
employee of BSFI as of the Closing Date who has at least one (1) year of service
with BSFI and who is terminated by AFC within twelve (12) months subsequent
to
the Closing Date or is not offered employment with AFC as of the Effective
Time,
excluding those employees who are entitled to benefits under change of control
arrangements, shall be entitled to severance benefits equal to two (2) weeks
annual cash compensation for each year of service with a minimum benefit of
four
(4) weeks and a maximum benefit of twenty-six (26) weeks (in each case less
applicable withholdings) plus (ii) outplacement services as described on
AFC Disclosure Schedule 7.9.8.
7.10 |
Directors
and Officers Indemnification and
Insurance.
|
7.10.1 AFC
shall
maintain in effect for six (6) years following the Effective Time, the current
directors’ and officers’ liability insurance policies maintained by BSFI
(provided, that AFC 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 AFC be required to expend pursuant
to
this Section 7.10.1 more than an amount equal to 150% of the current annual
amount expended by BSFI with respect to such insurance, as set forth in BSFI
Disclosure Schedule 7.10.1 (the “Maximum
Amount”);
provided, further, that if the amount of the aggregate premium necessary to
maintain or procure such insurance coverage exceeds the Maximum Amount, AFC
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, BSFI agrees in order for AFC to fulfill its
agreement to provide directors and officers liability insurance policies for
(6)
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.
7.10.2 In
addition to Section 7.10.1, for a period of six (6) years after the
Effective Time, AFC 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 BSFI or any BSFI 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 AFC, which consent shall
not be unreasonably withheld) 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 or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of BSFI or a BSFI 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). Any Indemnified Party wishing to claim indemnification under
this
Section 7.10.2 upon learning of any Claim, shall notify AFC (but the
failure so to notify AFC shall not relieve it from any liability which it may
have under this Section 7.10.2, except to the extent such failure
materially prejudices AFC). In the event of any such Claim (whether arising
before or after the Effective Time) (1) AFC 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 AFC 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 AFC 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 AFC and the Indemnified Parties,
the
Indemnified Parties may retain counsel reasonably satisfactory to them, and
AFC
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, AFC shall be obligated pursuant to this paragraph to pay for only
one
firm of counsel for all Indemnified Parties unless there is a conflict of
interest that necessitates more than one law firm, and (3) AFC shall not be
liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld, conditioned or
delayed).
7.10.3 In
the
event that either AFC or any of its successors or assigns (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving company 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 AFC shall assume the obligations set forth in this
Section 7.10.
7.10.4 The
obligations of AFC provided under this Section 7.10 are intended to be
enforceable against AFC directly by the Indemnified Parties and shall be binding
on all respective successors and permitted assigns of AFC.
7.11 |
Stock
Listing.
|
AFC
agrees to file a notification form for the listing on the NASDAQ Stock Market
(or such other national securities exchange on which the shares of the AFC
Common Stock shall be listed as of the Closing Date) of the shares of AFC Common
Stock to be issued in the Merger.
7.12 |
Reservation
of Stock.
|
AFC
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
AFC Common Stock to fulfill its obligations under this Agreement.
7.13 |
Communications
to BSFI Employees; Training
|
AFC
and
BSFI agree that as promptly as practicable following the execution of this
Agreement, meetings with employees of BSFI and the BSFI Subsidiaries shall
be
held at such locations as AFC and BSFI shall mutually agree, provided that
representatives of BSFI shall be permitted to attend such meetings. AFC and
BSFI
shall mutually agree in advance as to the scope and content of all
communications to the employees of BSFI and the BSFI Subsidiaries. At mutually
agreed upon times following execution of this Agreement, representatives of
AFC
shall be permitted to meet with the employees of BSFI and the BSFI Subsidiaries
to discuss employment opportunities with AFC, provided that representatives
of
BSFI shall be permitted to attend any such meeting. From and after the
Determination Date, AFC shall also be permitted to conduct training sessions
outside of normal business hours or at other times as BSFI may agree, with
the
employees of BSFI and the BSFI Subsidiaries and may conduct such training
seminars at any branch location of Oswego County National Bank; provided that
AFC will in good faith attempt to schedule such training sessions in a manner
which does not unreasonably interfere with Oswego County National Bank’s normal
business operations.
7.14 |
Changes
in Capitalization
|
AFC
shall
not, by way of a stock split, stock dividend, recapitalization,
reclassification, or similar transaction, change (or establish a record date
for
changing) the number of, or provide for the exchange of, shares of AFC Common
Stock issued and outstanding prior to the Effective Time; provided, however,
that AFC may repurchase or issue shares of AFC Common Stock under employee
benefit plans maintained by AFC, upon the exercise of stock options or if AFC
issues additional shares of AFC Common Stock and receives fair market value
consideration for such shares.
ARTICLE
VIII
REGULATORY
AND OTHER MATTERS
8.1 |
Meeting
of Shareholders.
|
8.1.1 BSFI
will
(i) take all steps necessary to duly call, give notice of, convene and hold
a special meeting of its stockholders as promptly as practicable after the
Merger Registration Statement is declared effective by the SEC, for the purpose
of considering this Agreement and the Merger (the “BSFI
Stockholders Meeting”),
(ii) in connection with the solicitation of proxies with respect to the
BSFI Stockholders Meeting, have its Board of Directors recommend approval of
this Agreement to the BSFI stockholders; and (iii) cooperate and consult
with AFC with respect to each of the foregoing matters. The Board of Directors
of BSFI 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
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.
8.1.2 AFC
will
(i) take all steps necessary to duly call, give notice of, convene and hold
a
special meeting of its shareholders as promptly as practicable after the Merger
Registration Statement is declared effective by the SEC, for the purpose of
considering this Agreement and the Merger (the “AFC
Shareholders Meeting”),
(ii)
in connection with the solicitation of proxies with respect to the AFC
Shareholders Meeting, have its Board of Directors recommend approval of this
Agreement to the AFC shareholders; and (iii) cooperate and consult with BSFI
with respect to each of the foregoing matters. The Board of Directors of AFC
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
financial and legal advisors, has determined that the making of such
recommendation, or the failure 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 AFC Common Stock to be offered to holders of
BSFI Common Stock in connection with the Merger with the SEC under the
Securities Act, (ii) of holding the BSFI Stockholders Meeting and (iii) of
holding the AFC Shareholders Meeting, AFC shall draft and prepare, and BSFI
shall cooperate in the preparation of, the Merger Registration Statement,
including a joint proxy statement and 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 joint proxy statement/prospectus in the form mailed by BSFI to the BSFI
stockholders and by AFC to the AFC shareholders, together with any and all
amendments or supplements thereto, being herein referred to as the “Proxy
Statement-Prospectus”).
AFC
shall provide BSFI and its counsel with appropriate opportunity to review and
comment on the Proxy Statement-Prospectus, and shall incorporate all appropriate
comments thereto, prior to the time it is initially filed with the SEC or any
amendments are filed with the SEC. AFC shall file the Merger Registration
Statement, including the Proxy Statement-Prospectus, with the SEC. Each of
AFC
and BSFI shall use its reasonable best efforts to have the Merger Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filing, and BSFI and AFC shall each thereafter promptly mail the
Proxy Statement-Prospectus to their respective stockholders. AFC shall also
use
its reasonable 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 BSFI shall furnish all information
concerning BSFI and the holders of BSFI Common Stock as may be reasonably
requested in connection with any such action.
8.2.2 AFC
shall,
as soon as practicable, file the Merger Registration Statement with the SEC
under the Securities Act in connection with the transactions contemplated by
this Agreement. AFC will advise BSFI promptly after AFC receives notice of
the
time when the Merger Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order or
the
suspension of the registration of the shares of AFC Common Stock issuable
pursuant to the Merger Registration Statement, or the initiation or threat
of
any proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the Merger Registration Statement, or for additional
information, and AFC will provide BSFI with as many copies of such Merger
Registration Statement and all amendments thereto promptly upon the filing
thereof as BSFI may reasonably request.
8.2.3 BSFI
and
AFC 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, BSFI shall cooperate with AFC in the preparation of a supplement or
amendment to such Proxy Statement-Prospectus that corrects such misstatement
or
omission, and AFC shall file an amended Merger Registration Statement with
the
SEC, and each of BSFI and AFC shall mail an amended Proxy Statement-Prospectus
to their respective shareholders.
8.3 |
Regulatory
Approvals.
|
Each
of
BSFI and AFC will cooperate with the other and use reasonable efforts to
promptly prepare and as soon as practicable following the date hereof, file
all
necessary documentation to obtain all necessary permits, consents, waivers,
approvals and authorizations of the OCC, the FRB and any other third parties
and
Governmental Entities necessary to consummate the transactions contemplated
by
this Agreement. BSFI and AFC will furnish each other and each other’s counsel
with all information concerning themselves, their Subsidiaries, directors,
officers and shareholders 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 BSFI or AFC to any Bank Regulator or Governmental Entity
in
connection with the Merger, Bank Merger and the other transactions contemplated
by this Agreement. BSFI shall have the right to review and approve in advance
all characterizations of the information relating to BSFI and any BSFI
Subsidiary which appear in any filing made in connection with the transactions
contemplated by this Agreement with any Governmental Entity. In addition, BSFI
and AFC 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 Entity prior to its filing. To the extent any Governmental Entity
makes an inquiry or initiates any proceeding relating to antitrust matters,
AFC
shall use its commercially reasonable efforts to address such matters in order
to allow for the consummation of the transactions contemplated hereby and AFC
shall be solely responsible for its expenses and BSFI’s reasonable costs and
expenses (as documented pursuant to Section 6.13) related
thereto.
8.4 |
Affiliates.
|
8.4.1 BSFI
shall use reasonable efforts to cause each director and executive officer (for
purposes of Rule 145 under the Securities Act) of BSFI to deliver to AFC, as
soon as practicable after the date of this Agreement, and at least fifteen
(15)
days prior to the date of the BSFI Stockholders Meeting, a Voting Agreement
providing that such person will not sell, pledge, transfer or otherwise dispose
of any shares of AFC 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.
ARTICLE
IX
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
and
adopted by the requisite votes of the stockholders of BSFI and the shareholders
of AFC.
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
Regulatory Approvals required to complete the Merger and the Bank Merger shall
have been obtained and shall remain in full force and effect and all waiting
periods relating thereto shall have expired and no such approval, authorization
or consent 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 AFC result in a Material Adverse Effect on BSFI or AFC,
or
in the good faith reasonable judgment of the Board of Directors of BSFI result
in a Material Adverse Effect on AFC.
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 AFC Common
Stock in the Merger is subject to the state securities or “blue sky” laws of any
state, shall not be subject to a stop order of any state securities
commissioner.
9.1.5 NASDAQ
Listing.
AFC
shall have filed a notification form for the listing of the AFC Common Stock
to
be issued in the Merger.
9.1.6 Tax
Opinion.
On the
basis of facts, representations and assumptions which shall be set forth in
the
certificate rendered pursuant to Section 2.6 and consistent with the state
of facts existing at the Closing Date, BSFI shall have received and provided
AFC
with a copy of an opinion of counsel to BSFI, reasonably acceptable in form
and
substance to BSFI, 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; and
(B) The
Bank
Merger will not adversely affect the Merger qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
9.1.7 Fairness
Opinions.
BSI
shall have received an opinion from Austin Associates, LLC, and AFC shall have
received an opinion from Xxxxx, Xxxxxxxx & Xxxxx, Inc., each 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 BSFI pursuant to this Agreement is fair to such shareholders from a financial
point of view. Neither of such opinion shall have been amended or rescinded
as
of the Effective Time.
9.2 |
Conditions
to the Obligations of AFC under this
Agreement.
|
The
obligations of AFC under this Agreement shall be further subject to the
satisfaction of the conditions set forth in Sections 9.2.1 through 9.2.8 at
or prior to the Closing Date:
9.2.1 Representations
and Warranties.
Each of
the representations and warranties of BSFI 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, which only need be true and correct
as
of such earlier date), in any case subject to the standard set forth in
Section 4.1; and BSFI shall have delivered to AFC a certificate to such
effect signed by the Chief Executive Officer and the Chief Financial Officer
of
BSFI as of the Effective Time.
9.2.2 Agreements
and Covenants.
BSFI
and each BSFI Subsidiary 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 AFC shall have received a certificate signed on behalf
of
BSFI by the Chief Executive Officer and Chief Financial Officer of BSFI to
such
effect dated as of the Effective Time.
9.2.3 Regulatory
Conditions.
No
Regulatory Approval required for consummation the Merger and Bank Merger shall
include any condition or requirement, excluding standard conditions that are
normally imposed by the regulatory authorities in bank merger transactions
that
could reasonably be expected by AFC to result in a Material Adverse Effect
on
BSFI and its Subsidiaries, taken as a whole.
9.2.4 Permits,
Authorizations, Etc.
BSFI
and the BSFI Subsidiaries shall have obtained any and all permits,
authorizations, consents, waivers, clearances or approvals required for the
lawful consummation of the Merger and the Bank Merger, the failure of which
to
obtain would have a Material Adverse Effect on BSFI, Oswego County National
Bank, AFC or Alliance Bank.
9.2.5 No
Material Adverse Effect.
There
shall have been no changes, other than changes contemplated by this Agreement,
in the business, operations, condition (financial or otherwise), assets or
liabilities of BSFI and the BSFI Subsidiaries (regardless of whether or not
such
events or changes are inconsistent with the representations and warranties
given
herein) that individually or in the aggregate has had or reasonably could be
expected to have a Material Adverse Effect on BSFI or the BSFI
Subsidiaries.
9.3 |
Conditions
to the Obligations of BSFI under this
Agreement.
|
The
obligations of BSFI under this Agreement shall be further subject to the
satisfaction of the conditions set forth in Sections 9.3.1 through 9.3.4 at
or prior to the Closing Date:
9.3.1 Representations
and Warranties.
Each of
the representations and warranties of AFC 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, which only need be true and correct
as
of such earlier date), in any case subject to the standard set forth in
Section 5.1; and AFC shall have delivered to BSFI a certificate to such
effect signed by the Chief Executive Officer and Chief Financial Officer of
AFC
as of the Effective Time.
9.3.2 Agreements
and Covenants.
AFC and
Alliance Bank 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 BSFI shall have received a certificate signed on behalf of AFC by the Chief
Executive Officer and Chief Financial Officer of AFC to such effect dated as
of
the Effective Time.
9.3.3 Regulatory
Conditions.
No
Regulatory Approval required for consummation the Merger and Bank Merger shall
include any condition or requirement, excluding standard conditions that are
normally imposed by the regulatory authorities in bank merger transactions,
that
could reasonably be expected by BSFI to result in a Material Adverse Effect
on
AFC and its Subsidiaries, taken as a whole.
9.3.4 Permits,
Authorizations, Etc.
AFC and
Alliance Bank shall have obtained any and all permits, authorizations, consents,
waivers, clearances or approvals required for the lawful consummation of the
Merger and the Bank Merger, the failure of which to obtain would have a Material
Adverse Effect on AFC and Alliance Bank, taken as a whole.
9.3.5 No
Material Adverse Effect.
There
shall have been no changes, other than changes contemplated by this Agreement,
in the business, operations, condition (financial or otherwise), assets or
liabilities of AFC and the AFC Subsidiaries (regardless of whether or not such
events or changes are inconsistent with the representations and warranties
given
herein) that individually or in the aggregate has had or reasonably could be
expected to have a Material Adverse Effect on AFC or the AFC
Subsidiaries.
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 Xxxxx
Peabody LLP, Clinton Square, Rochester, New York, at 10:00 a.m. on the date
determined by AFC, in its sole discretion, upon five (5) days prior written
notice to BSFI, but in no event later than thirty days (30) after the last
condition precedent (other than those conditions that relate to actions to
be
taken at the Closing, but subject to the fulfillment or waiver of those
conditions) pursuant to this Agreement has been fulfilled or waived (including
the expiration of any applicable waiting period), or at such other place, date
or time upon which AFC and BSFI mutually agree. A pre-closing of the
transactions contemplated hereby (the “Pre-Closing”) shall take place at the
offices of Xxxxx Xxxxxxx LLP, at 10:00 a.m. on the day prior to the Closing
Date
(the “Pre-Closing Date”).
10.2 |
Deliveries
at the Pre-Closing and the
Closing.
|
At
the
Pre-Closing there shall be delivered to AFC and BSFI 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, AFC 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 BSFI:
11.1.1 At
any
time by the mutual written agreement of AFC and BSFI;
11.1.2 By
either
party (provided, that the terminating party is not then in breach of any
representation, warranty, covenant or other agreement contained herein) if
there
shall have been a 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 Closing Date or shall not have been cured within
thirty (30) days after written notice of such breach by the terminating party
to
the other party, conditioned upon the defaulting party promptly commencing
to
cure the default and thereafter continuing to cure the default; provided,
however, that neither party shall have the right to terminate this Agreement
pursuant to this Section 11.1.2 unless the breach of representation or warranty,
together with all other such breaches, would entitle the terminating party
not
to consummate the transactions contemplated hereby under Section 9.2.1 (in
the
case of a breach of a representation or warranty by BSFI) or Section 9.3.1
(in
the case of a breach of a representation or warranty by AFC);
11.1.3 By
either
party (provided, that the terminating party is not then in breach of any
representation, warranty, covenant or other agreement contained herein) if
there
shall have been a failure to perform or comply with any of the covenants or
agreements set forth in this Agreement on the part of the other party or its
Subsidiaries, which failure by its nature cannot be cured prior to the Closing
Date or shall not have been cured within thirty (30) days after written notice
of such failure by the terminating party to the other party, conditioned upon
the defaulting party promptly commencing to cure the default and thereafter
continuing to cure; provided, however, that neither party shall have the right
to terminate this Agreement pursuant to this Section 11.1.3 unless the breach
of
covenant or agreement, together with all other such breaches, would entitle
the
terminating party not to consummate the transactions contemplated hereby under
Section 9.2.2 (in the case of a breach of covenant by BSFI) or Section 9.3.2
(in
the case of a breach of covenant by AFC);
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
AFC and BSFI; 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 (i) the stockholders of BSFI shall have voted at the BSFI Stockholders
Meeting on the transactions contemplated by this Agreement and such vote shall
not have been sufficient to approve and adopt such transactions or (ii) the
shareholders of AFC shall have voted on the transactions contemplated by this
Agreement and such vote shall not have been sufficient to approve and adopt
such
transactions.
11.1.6 By
either
party if (i) final action has been taken by a Bank Regulator whose approval
is required in order to satisfy the conditions to the parties’ obligations to
consummate the transactions contemplated hereby as set forth in Article IX,
which final action (x) has become unappealable and (y) does not
approve this Agreement or the transactions contemplated hereby, (ii) any
court of competent jurisdiction or other Governmental Entity 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 AFC if BSFI has received a Superior Proposal and the
Board
of Directors of BSFI has entered into an acquisition agreement with respect
to
the Superior Proposal, withdrawn its recommendation of this Agreement, has
failed to make such recommendation or has modified or qualified its
recommendation in a manner adverse to AFC.
11.1.8 By
the
Board of Directors of BSFI if BSFI has received a Superior Proposal and the
Board of Directors of BSFI has made a determination to accept such Superior
Proposal; provided that BSFI shall not terminate this Agreement pursuant to
this
Section 11.1.8 and enter into a definitive agreement with respect to the
Superior Proposal until the expiration of five (5) business days following
AFC’s
receipt of written notice advising AFC that BSFI 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
BSFI intends to enter into a definitive agreement with respect to the Superior
Proposal. After providing such notice, BSFI shall provide a reasonable
opportunity to AFC during the five-day period to make such adjustments in the
terms and conditions of this Agreement as would enable BSFI to proceed with
the
Merger on such adjusted terms.
11.1.9 By
BSFI,
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, such termination to be effective on the 30th day following
such Determination Date (“Effective
Termination Date”),
if
both of the following conditions are satisfied:
(i) the
AFC
Market Value on the Determination Date is less than the product of 0.85 and
the
Initial AFC Market Value; and
(ii) (a) the
number obtained by dividing the AFC Market Value on the Determination Date
by
the Initial AFC Market Value (“AFC
Ratio”)
shall
be less than (b) the quotient obtained by dividing the Final Index Price by
the Initial Index Price minus 0.15 (such number, the “Index
Ratio”);
If
BSFI
elects to exercise its termination right pursuant to this Section 11.1.9,
it shall give prompt written notice thereof to AFC; provided, that such notice
of election to terminate may be withdrawn at any time prior to the Effective
Termination Date. During the five-day period commencing with its receipt of
such
notice, AFC shall have the option to adjust the Exchange Ratio to equal the
lesser of (i) a quotient, the numerator of which is equal to the product of
the Initial AFC Market Value, the Exchange Ratio, and the Index Ratio, and
the
denominator of which is equal to AFC Market Value on the Determination Date;
or
(ii) a quotient, the numerator of which is equal to the product of 0.85,
the Initial AFC Market Value, and the Exchange Ratio and the denominator of
which is equal to the AFC Market Value on the Determination Date. If AFC so
elects, it shall give, within such five-day period, written notice to BSFI
of
such election and the Revised Exchange Ratio, whereupon no termination shall
be
deemed to have occurred pursuant to this Section 11.1.9 and this Agreement
shall remain in full force and effect in accordance with its terms (except
as
the Revised Exchange Ratio shall have been so modified).
For
purposes of this Section 11.1.9, 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) agree or commit to take any action
referenced above.
“AFC
Market Value”
shall
be the average of the daily closing sales prices of a share of AFC Common Stock
as reported on the NASDAQ National Market for the ten (10) consecutive trading
days immediately preceding the Determination Date.
“Determination
Date”
shall
mean the first date on which all Regulatory Approvals (and waivers, if
applicable) necessary for consummation of the Merger and the Bank 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.
“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 ten (10) 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 transaction with
a
value exceeding 25% of the acquiror’s market capitalization, 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:
Company
Name
|
Index
Weighting(%)
|
Index
Price
|
U.S.B.
Holding Co., Inc.
|
7.88
|
$1.77
|
Xxxxx
Spring Bancorp, Inc.
|
5.37
|
2.01
|
Lakeland
Bancorp, Incorporated
|
7.61
|
1.13
|
Xxxxxxxx
Trustco, Inc.
|
3.26
|
1.56
|
Financial
Institutions, Inc.
|
4.11
|
0.79
|
Omega
Financial Corporation
|
4.57
|
1.50
|
Arrow
Financial Corporation
|
3.79
|
1.06
|
Suffolk
Bancorp
|
3.75
|
1.22
|
First
Mariner Bancorp
|
2.27
|
0.44
|
First
United Corporation
|
2.22
|
0.49
|
Royal
Bancshares of Pennsylvania, Inc.
|
4.53
|
1.08
|
Peapack-Gladstone
Financial Corporation
|
3.01
|
0.79
|
Citizens
& Northern Corporation
|
3.01
|
0.73
|
Center
Bancorp, Inc.
|
4.88
|
0.63
|
Canandaigua
National Corporation
|
0.17
|
0.62
|
First
National Community Bancorp, Inc.
|
4.43
|
1.28
|
Berkshire
Bancorp Inc.
|
2.50
|
0.41
|
Leesport
Financial Corp.
|
1.84
|
0.46
|
ACNB
Corporation
|
1.97
|
0.40
|
First
of Long Island Corporation
|
1.40
|
0.60
|
Greater
Community Bancorp
|
2.90
|
0.45
|
AmeriServ
Financial, Inc.
|
8.03
|
0.41
|
Smithtown
Bancorp, Inc.
|
2.15
|
0.78
|
Shore
Bancshares, Inc.
|
2.02
|
0.72
|
Republic
First Bancorp, Inc.
|
3.13
|
0.47
|
First
Xxxxxxx County Corporation
|
1.87
|
0.41
|
CNB
Financial Corporation
|
3.28
|
0.45
|
Xxxxxx
Corporation
|
4.05
|
0.44
|
100%
|
$23.10
|
“Initial
AFC Market Value”
means
$30.49.
“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.
If
AFC or
any company belonging to the Index Group declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination, exchange of shares
or
similar transaction between the 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 11.1.9.
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,
12.2, 12.3, 12.4, 12.5, 12.6, 12.9, 12.10, 12.11, 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 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.
(C) As
a
condition of AFC’s willingness, and in order to induce AFC to enter into this
Agreement, and to reimburse AFC for incurring the costs and expenses related
to
entering into this Agreement and consummating the transactions contemplated
by
this Agreement, BSFI hereby agrees to pay AFC, and AFC shall be entitled to
payment of, a fee of $2,200,000 plus expenses actually incurred by AFC in
connection with the transactions contemplated hereby, including legal,
accounting, financial advisor and other consultant expenses (the “Termination
Fee”),
by
wire transfer of same day funds on the earlier of (x) the date of
termination or (y) within three (3) business days after written demand for
payment is made by AFC, as applicable, following the occurrence of any of the
events set forth below:
(i) BSFI
terminates this Agreement pursuant to Section 11.1.8 or AFC terminates this
Agreement pursuant to Section 11.1.7; or
(ii) The
entering into a definitive agreement by BSFI relating to an Acquisition Proposal
or the consummation of an Acquisition Proposal involving BSFI within one year
after the occurrence of any of the following: (i) the termination of this
Agreement by AFC pursuant to Section 11.1.2 or 11.1.3 because of a breach
by BSFI or any BSFI Subsidiary after the occurrence of an Acquisition Proposal
has been publicly announced or otherwise made known to the stockholders of
BSFI;
or (ii) the termination of this Agreement by AFC or BSFI pursuant to
Section 11.1.5 because of the failure of the stockholders of BSFI to
approve this Agreement at the BSFI Stockholders Meeting after the occurrence
of
an Acquisition Proposal has been publicly announced or otherwise made known
to
the stockholders of BSFI.
(D) Upon
payment of the Termination Fee pursuant to Section 11.2.2(C), AFC will not
have any other rights or claims against BSFI or any BSFI Subsidiary, or their
respective officers and directors, under this Agreement, it being agreed that
the acceptance of the Termination Fee under Section 11.2.2(C) will
constitute the sole and exclusive remedy of AFC against BSFI and its
Subsidiaries and their respective officers and directors.
Subject
to applicable law, at any time prior to the Effective Time (whether before
or
after approval thereof by the stockholders of BSFI), 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 BSFI, there may not be, without further approval of such
shareholders, any amendment of this Agreement which reduces the amount or value,
or changes the form of, the Merger Consideration to be delivered to BSFI’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 subsequent or other failure. Any termination
of
this Agreement pursuant to this 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, AFC and BSFI mutually agree to be bound by the
terms of the Confidentiality Agreements, which are hereby incorporated herein
by
reference, and all information furnished by either party to the other party
or
its representatives pursuant hereto (including pursuant to Sections 6.2 and
6.3) shall be subject to, and the parties shall hold such information in
confidence in accordance with, the provisions of the Confidentiality Agreements.
The parties hereto agree that the Confidentiality Agreements shall continue
in
accordance with its terms, notwithstanding the termination of this
Agreement.
12.2 |
Public
Announcements.
|
BSFI
and
AFC 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 BSFI nor AFC 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 (i) receipted hand delivery, (ii) facsimile with
confirmation of transmission, (iii) mailed by prepaid registered or certified
mail (return receipt requested), or (iv) by recognized overnight courier
addressed as follows:
If
to
BSFI,
to:
Xx.
Xxxxxxx X. Xxxxx
President
and CEO
Bridge
Street Financial, Inc.
000
Xxxxx
Xxxxx 000
Xxxxxx,
Xxx Xxxx 00000
With
required copies
to:
Xxxxxxx
X. Xxxxxxxx, Esq.
Xxxxxxx
Xxxxxxxx & Xxxx LLP
0000
Xxxxxxxxxxxx Xxx., XX
Xxxxx
000
Xxxxxxxxxx,
XX 00000
If
to
AFC,
to:
Xx.
Xxxx
X. Xxxx
President
and CEO
Alliance
Financial Corporation
000
Xxxxxxx Xxxxxx, Xxxxx II
00xx
Xxxxx
Xxxxxxxx,
Xxx Xxxx 00000
With
required copies
to:
Xx.
Xxxx
X. Xxxx
Executive
Vice President
Alliance
Financial Corporation
000
Xxxxxxx Xxxxxx, Xxxxx II
00xx
Xxxxx
Xxxxxxxx,
Xxx Xxxx 00000
Xxxxxx
X.
Xxxxx, Esq.
Xxxxx
Xxxxxxx LLP
0000
Xxxxxxx Xxxxxx
Xxxxxxxxx,
Xxx Xxxx 00000
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, as applicable: (i) as
of the date delivered by hand, (ii) upon confirmation of transmission, (iii)
three (3) business days after being delivered to the U.S. mail, postage prepaid,
or (iv) one (1) 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. Except for the individuals named on BSFI Disclosure Schedule 7.9.7
with respect to Section 7.9.7 hereof and except for BSFI’s current directors
with respect to Section 7.10 hereof, nothing in this Agreement is intended
to
confer upon any person or entity other than the parties hereto 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, and the Confidentiality Agreements, 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) 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. A facsimile copy of a signature page shall be deemed to be an original
signature page.
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 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 and construed in accordance with the laws of
the
State of New York, without giving effect to principles of conflicts of law
other
than Section 5-1401 of the New York General Obligations Law.
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. The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions
of
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 was otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions, without the posting
of bond or other security, 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.
12.12 |
Waiver
of Trial by Jury.
|
The
parties hereto hereby knowingly, voluntarily and intentionally waive the right
any may have to a trial by jury in respect to any litigation based hereon,
or
rising out of, under, or in connection with this Agreement and any agreement
contemplated to be executed in connection herewith, or any course of conduct,
course of dealing, statements (whether verbal or written) or actions of either
party in connection with such agreements.
[Signature
Page Follows]
ALLIANCE
FINANCIAL CORPORATION
|
|
By:
|
/s/
Xxxx X. Xxxx
|
Name:
|
Xxxx
X. Xxxx
|
Title:
|
President
and Chief Executive Officer
|
BRIDGE
STREET FINANCIAL, INC.
|
|
By:
|
/s/
Xxxxxxx X. Xxxxx
|
Name:
|
Xxxxxxx
X. Xxxxx
|
Title:
|
President
and Chief Executive Officer
|