SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 30, 1999
NIAGARA BANCORP, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-23975 16-1545669
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(State or Other Jurisdiction (Commission File No.) (I.R.S. Employer
of Incorporation) Identification No.)
6950 South Transit Road, P.O. Box 514, Lockport, New York 14095-0514
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (716) 625-7500
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Not Applicable
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(Former name or former address, if changed since last report)
Items 1, 2, 3, 4 and 6: Not Applicable
Item 5. Other Events
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Niagara Bancorp, Inc. (the "Registrant" or "Niagara Bancorp") entered into
an Agreement and Plan of Merger (the "Agreement') with Albion Banc Corp.
("Albion") as of August 30, 1999. Albion is the holding company for Albion
Federal Savings and Loan Association. As of June 30, 1999, Albion had total
assets of $78.7 million and total deposits of $61.0 million. Under the terms of
the Agreement, Albion will be merged into a subsidiary of Niagara Bancorp, all
shares and outstanding stock options of Albion will be cancelled, and Niagara
Bancorp will pay $15.75 per share in cash for each of the 753,058 outstanding
shares and outstanding stock options. As a result of the merger, Albion Federal
Savings and Loan Association will merge into Lockport Savings Bank, a subsidiary
of Niagara Bancorp, and Albion's two branch locations will become branch offices
of Lockport Savings Bank. The aggregate purchase price for Albion is
approximately $12.4 million. The transaction will be accounted for using the
purchase method.
Consummation of the merger is subject to approval by Albion shareholders
and the receipt of all required regulatory approvals. It is anticipated that the
transaction will be completed by the end of the first quarter of the year 2000.
Item 7. Financial Statements, Pro Forma Financial Information, and Exhibits
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The following Exhibits are filed as part of this report:
Exhibit No. Description
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2.1 Agreement and Plan of Merger, dated August 30, 1999
by and between Niagara Bancorp, Inc., Niagara Merger
Subsidiary, Inc., Lockport Savings Bank and Albion Banc
Corp. and Albion Federal Savings and Loan Association
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
NIAGARA BANCORP, INC.
DATE: September 10, 1999 By: /s/ William E. Swan
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William E. Swan
President and Chief Executive Officer
EXHIBIT INDEX
The following Exhibits are filed as part of this report:
Exhibit No. Description
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2.1 Agreement and Plan of Merger, dated August 30, 1999
by and between Niagara Bancorp, Inc., Niagara Merger
Subsidiary, Inc., Lockport Savings Bank and Albion Banc
Corp. and Albion Federal Savings and Loan Association
AGREEMENT AND PLAN OF MERGER
By and Between
NIAGARA BANCORP, INC.,
NIAGARA MERGER SUBSIDIARY, INC.,
LOCKPORT SAVINGS BANK
And
ALBION BANC CORP.
And
ALBION FEDERAL SAVINGS AND LOAN ASSOCIATION
Dated as of August 30, 1999
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions......................................................2
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01 Effects of Merger; Surviving Corporation.....................7
Section 2.02 Conversion of Shares.........................................8
Section 2.03 Exchange Procedures..........................................8
Section 2.04 Stock Options...............................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ABC AND ALBION FEDERAL
Section 3.01 Organization....................................................10
Section 3.02 Capitalization..................................................11
Section 3.03 Authority; No Violation.........................................12
Section 3.04 Consents........................................................12
Section 3.05 Financial Statements............................................13
Section 3.06 Taxes...........................................................13
Section 3.07 No Material Adverse Effect......................................14
Section 3.08 Contracts.......................................................14
Section 3.09 Ownership of Property; Insurance Coverage.......................15
Section 3.10 Legal Proceedings...............................................16
Section 3.11 Compliance With Applicable Law..................................16
Section 3.12 ERISA...........................................................17
Section 3.13 Brokers, Finders and Financial Advisors.........................19
Section 3.14 Environmental Matters...........................................19
Section 3.15 Loan Portfolio..................................................20
Section 3.16 Information to be Supplied......................................22
Section 3.17 Securities Documents............................................22
Section 3.18 Related Party Transactions......................................22
Section 3.19 Schedule of Termination Benefits................................22
Section 3.20 Deposits........................................................23
Section 3.21 Antitakeover Provisions Inapplicable............................23
Section 3.22 Fairness Opinion................................................23
Section 3.21 Year 2000.......................................................23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LOCKPORT SAVINGS
AND NIAGARA BANCORP
Section 4.01 Organization....................................................24
Section 4.02 Authority; No Violation.........................................24
Section 4.03 Consents........................................................25
Section 4.04 Financial Statements............................................26
Section 4.05 Compliance With Applicable Law..................................26
Section 4.06 Information to be Supplied......................................26
Section 4.07 Year 2000.......................................................27
Section 4.08 Financing.......................................................27
Section 4.09 Regulatory Approvals............................................27
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01 Conduct of ABC's Business.......................................28
Section 5.02 Access; Confidentiality.........................................31
Section 5.03 Regulatory Matters and Consents.................................32
Section 5.04 Taking of Necessary Action......................................33
Section 5.05 Certain Agreements..............................................33
Section 5.06 No Other Bids and Related Matters...............................35
Section 5.07 Duty to Advise; Duty to Update ABC's Disclosure Schedules.......36
Section 5.08 Conduct of Niagara Bancorp's Business...........................36
Section 5.09 Board and Committee Minutes.....................................36
Section 5.10 Undertakings by ABC and Niagara Bancorp.........................37
Section 5.11 Employee and Termination Benefits; Directors and Management.....39
Section 5.12 Duty to Advise; Duty to Update Niagara
Bancorp's Disclosure Schedules..................................40
Section 5.13 Bank and Related Merger Transactions............................41
ARTICLE VI
CONDITIONS
Section 6.01 Conditions to ABC's Obligations under this Agreement............41
Section 6.02 Conditions to Niagara Bancorp's
Obligations under this Agreement................................43
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination.....................................................44
Section 7.02 Effect of Termination...........................................45
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses........................................................45
Section 8.02 Non-Survival of Representations and Warranties..................46
Section 8.03 Amendment, Extension and Waiver.................................46
Section 8.04 Entire Agreement................................................46
Section 8.05 No Assignment...................................................46
Section 8.06 Notices.........................................................46
Section 8.07 Captions........................................................47
Section 8.08 Counterparts....................................................47
Section 8.09 Severability....................................................47
Section 8.10 Governing Law...................................................48
Section 8.11 Specific Performance............................................48
Exhibits:
Exhibit A Form of Bank Merger Agreement
Exhibit B Form of ABC Voting Agreement
Exhibit 6.1 Form of Opinion of Counsel for Niagara Bancorp
Exhibit 6.2 Form of Tax Opinion of Counsel for Niagara Bancorp
Exhibit 6.3 Form of Opinion of Counsel for ABC
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
August 30, 1999, is by and among Niagara Bancorp, Inc., a Delaware corporation
("Niagara Bancorp"), Niagara Merger Subsidiary, Inc., a wholly-owned subsidiary
of Niagara Bancorp incorporated under the laws of the State of Delaware
("Niagara Merger Subsidiary"), Lockport Savings Bank, a New York chartered
savings bank ("Lockport Savings"), and Albion Banc Corp., a Delaware corporation
("ABC") and Albion Federal Savings and Loan Association, a federally chartered
savings and loan association ("Albion Federal"). Each of Niagara Bancorp,
Niagara Merger Subsidiary, Lockport Savings, Albion Federal and ABC is sometimes
individually referred to herein as a "party," and Niagara Bancorp, Niagara
Merger Subsidiary, Lockport Savings, Albion Federal and ABC are sometimes
collectively referred to herein as the "parties."
RECITALS
WHEREAS, Niagara Bancorp, a registered bank holding company, with
principal offices in Lockport, New York, owns all of the issued and outstanding
capital stock of Lockport Savings, with principal offices in Lockport, New York.
WHEREAS, ABC, a registered savings and loan holding company, with
principal offices in Albion, New York, owns all of the issued and outstanding
capital stock of Albion Federal, a federal savings and loan association
organized under the laws of the United States, with principal
offices in Albion, New York.
WHEREAS, the Boards of Directors of the respective parties hereto deem
it advisable and in the best interests of the respective stockholders to
consummate the business combination transaction contemplated herein in which:
(i) Niagara Merger Subsidiary, subject to the terms and conditions set forth
herein, shall be merged with and into ABC, with ABC surviving the merger, (ii)
to be followed by the merger of ABC with and into Niagara Bancorp, with Niagara
Bancorp surviving the merger (collectively referred to as the "Company Merger"),
with the result that Albion Federal shall be a wholly-owned subsidiary of
Niagara Bancorp, and (iii) Albion Federal shall be merged with and into Lockport
Savings, with Lockport Savings surviving the merger (the "Bank Merger") (the
Company Merger and the Bank Merger are sometimes collectively referred to as the
"Merger"); and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
Merger, and the other transactions contemplated by this Agreement (collectively,
the "Merger Documents").
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions. Except as otherwise provided herein, as used
in this Agreement, the following terms shall have the indicated meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"ABC Common Stock" means the common stock of ABC described in
Section 3.02(a).
"ABC Disclosure Schedules" means the Disclosure Schedules
delivered by ABC to Niagara Bancorp pursuant to Article III of this
Agreement.
"ABC Financials" means (i) the audited consolidated financial
statements of ABC as of December 31, 1997 and 1998 and for the three
years ended December 31, 1998, including the notes thereto, and (ii)
the unaudited interim consolidated financial statements of ABC as of
each calendar quarter thereafter included in Securities Documents filed
by ABC.
"ABC Regulatory Reports" means the Thrift Financial Reports of
Albion Federal and accompanying schedules, as filed with the OTS, for
each calendar quarter beginning with the quarter ended March 31, 1997,
through the Closing Date, and all Annual, Quarterly and Current Reports
filed on Form H-(b)11 with the OTS by ABC from March 31, 1997 through
the Closing Date.
"ABC Subsidiary" means any corporation, 50% or more of the
capital stock of which is owned, either directly or indirectly, by ABC
or Albion Federal, except any corporation the stock of which is held in
the ordinary course of the lending activities of ABC.
"Affiliate" means, with respect to any Person, any Person who
directly, or indirectly, through one or more intermediaries, controls,
or is controlled by, or is under common control with, such Person and,
without limiting the generality of the foregoing, includes any
executive officer or director of such Person and any Affiliate of such
executive officer or director.
"Agreement" means this agreement, and any amendment or
supplement hereto, which constitutes a "plan of merger" between Niagara
Bancorp, Niagara Merger Subsidiary and ABC.
"Applications" means the applications for regulatory approval
which are required by the transactions contemplated hereby.
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"Bank Merger" means the merger of Albion Federal with and into
Lockport Savings, with Lockport Savings as the surviving institution.
"Bank Merger Effective Date" shall mean the date, after the
Bank Merger is approved by the Department, that all filings are made
with the Department.
"BHCA" means the Bank Holding Company Act of 1956, as amended.
"BIF" means the Bank Insurance Fund administered by the FDIC.
"Closing Date" means the date determined by Niagara Bancorp,
in its sole discretion, upon five (5) days prior written notice to ABC,
but in no event later than fifteen (15) days after the last condition
precedent pursuant to this Agreement has been fulfilled or waived
(including the expiration of any applicable waiting period), or such
other date as to which Niagara Bancorp and ABC shall mutually agree.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Merger" means the merger of Niagara Merger Subsidiary
with and into ABC, with ABC surviving the merger, to be followed by the
merger of ABC, as a wholly-owned subsidiary of Niagara Bancorp, with
and into Niagara Bancorp, with Niagara Bancorp being the surviving
corporation.
"Department" means the State of New York Department of
Banking.
"DGCL" means the Delaware General Corporation Law.
"Dissenters' Shares" means shares of ABC Common Stock that
have not been voted in favor of approval of the Company Merger and with
respect to which appraisal rights have been perfected in accordance
with Section 262 of the DGCL.
"DOL" means the U.S. Department of Labor.
"Environmental Law" means any Federal or state law, statute,
rule, regulation, code, order, judgement, decree, injunction, common
law or agreement with any Federal or state governmental authority
relating to (i) the protection, preservation or restoration of the
environment (including air, water vapor, surface water, groundwater,
drinking water supply, surface land, subsurface land, plant and animal
life or any other natural resource), (ii) human health or safety, or
(iii) exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of, hazardous substances, in each case as amended
and now in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
3
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated from time to time
thereunder.
"Exchange Agent" means the entity selected by Niagara Bancorp
and agreed to by ABC, as provided in Section 2.03(a) of this Agreement.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLB" means the Federal Home Loan Bank.
"FRB" means the Board of Governors of the Federal Reserve
System.
"GAAP" means generally accepted accounting principles as in
effect at the relevant date and consistently applied.
"Hazardous Material" means any substance (whether solid,
liquid or gas) which is or could be detrimental to human health or
safety or to the environment, currently or hereafter listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or
by quantity, including any substance containing any such substance as a
component. Hazardous Material includes, without limitation, any toxic
waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance, oil or petroleum,
or any derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos-containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
"HOLA" means the Home Owners' Loan Act, as amended.
"IRC" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
"Loan Property" shall have the meaning given to such term in
Section 3.14(b) of this Agreement.
"Material Adverse Effect" shall mean, with respect to Niagara
Bancorp or ABC, any adverse effect on its assets, financial condition
or results of operations which is material to its assets, financial
condition or results of operations on a consolidated basis, except for
any material adverse effect caused by (i) any change in the value of
the assets of Niagara Bancorp or ABC resulting from a change in
interest rates generally, (ii) any individual or combination of changes
occurring after the date hereof in any federal or state law, rule or
regulation or in
4
GAAP, which change(s) affect(s) financial institutions generally,
including any changes affecting the Bank Insurance Fund or the Savings
Association Insurance Fund, or (ii) expenses incurred in connection
with this Agreement and the transactions contemplated thereby.
"Merger Effective Date" means that date upon which the
certificate of merger as to the merger of Niagara Merger Subsidiary
with and into ABC is filed with the Delaware Office of the Secretary of
State or as otherwise stated in the certificate of merger, in
accordance with the DGCL.
"Merger Consideration" has the meaning given to that term in
Section 2.02(a)(i) of this Agreement.
"Niagara Bancorp Common Stock" has the meaning given to that
term in Section 4.02(a) of this Agreement.
"Niagara Bancorp Disclosure Schedules" means the Disclosure
Schedules delivered by Niagara Bancorp to ABC pursuant to Article IV of
this Agreement.
"Niagara Bancorp Financials" means (i) the audited
consolidated financial statements of Niagara Bancorp as of December 31,
1997 and 1998 and for the three years ended December 31, 1998,
including the notes thereto, and (ii) the unaudited interim
consolidated financial statements of Niagara Bancorp as of each
calendar quarter thereafter included in Securities Documents filed by
Niagara Bancorp.
"Niagara Bancorp Subsidiary" means any corporation, 50% or
more of the capital stock of which is owned, either directly or
indirectly, by Niagara Bancorp or Lockport Savings, except any
corporation the stock of which is held as security by Lockport Savings
in the ordinary course of its lending activities.
"OTS" means the Office of Thrift Supervision.
"Participation Facility" shall have the meaning given to such
term in Section 3.14(b) of this Agreement.
"Person" means any individual, corporation, partnership, joint
venture, association, trust or "group" (as that term is defined under
the Exchange Act).
"Proxy Statement" means the proxy statement, together with any
supplements thereto, to be transmitted to holders of ABC Common Stock
in connection with the transactions contemplated by this Agreement.
5
"Regulatory Agreement" has the meaning given to that term in
Section 3.11 of this Agreement.
"Regulatory Authority" means any agency or department of any
Federal or state government, including without limitation the
Superintendent, OTS, the FDIC, the FRB, the
SEC or the respective staffs thereof.
"Rights" means warrants, options, rights, convertible
securities and other capital stock equivalents which obligate an entity
to issue its securities.
"SAIF" means the Savings Association Insurance Fund, as
administered by the FDIC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated from time to time thereunder.
"Securities Documents" means all registration statements,
schedules, statements, forms, reports, proxy material, and other
documents required to be filed under the Securities
Laws.
"Securities Laws" means the Securities Act and the Exchange
Act and the rules and regulations promulgated from time to time
thereunder.
"Subsidiary" means any corporation, 50% or more of the capital
stock of which is owned, either directly or indirectly, by another
entity, except any corporation the stock of which is held as security
by either Lockport Savings or Albion Federal, as the case may be, in
the ordinary course of its lending activities.
"Superintendent" means the Superintendent of Banks of the
State of New York, and where appropriate includes the State of New York
Banking Department and the Banking
Board of the State of New York.
"Surviving Corporation" has the meaning iven to that term in
Section 2.01(a)(i) of this Agreement.
6
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01 Effects of Merger; Surviving Corporation.
(a) (i) On the Merger Effective Date, ABC shall merge with and into
Niagara Merger Subsidiary; the separate existence of Niagara Merger Subsidiary
shall cease; ABC shall be the surviving corporation in the Merger (the
"Surviving Corporation") and a wholly-owned subsidiary of Niagara Bancorp; and
all of the property (real, personal and mixed), rights, powers and duties and
obligations of Niagara Merger Subsidiary shall be taken and deemed to be
transferred to and vested in ABC, as the Surviving Corporation in the Merger,
without further act or deed; all in accordance with the applicable laws of the
State of Delaware.
(ii) On the Merger Effective Date: the Certificate of
Incorporation of the Surviving Corporation shall be amended and restated to read
in its entirety as the Certificate of Incorporation of Niagara Merger
Subsidiary, as in effect immediately prior to the Merger Effective Date; and the
Bylaws of the Surviving Corporation shall be amended and restated to read in
their entirety as the Bylaws of Niagara Merger Subsidiary, as in effect
immediately prior to the Merger Effective Date, until thereafter altered,
amended or repealed in accordance with applicable law.
(iii) On the Merger Effective Date, the directors of Niagara
Merger Subsidiary duly elected and holding office immediately prior to the
Effective Date shall be the directors of the Surviving Corporation in the
Merger, each to hold office until his or her successor is elected and qualified
or otherwise in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation.
(iv) On the Merger Effective Date, the officers of Niagara
Merger Subsidiary duly elected and holding office immediately prior to the
Effective Date shall be the officers of the Surviving Corporation in the Merger,
each to hold office until his or her successor is elected and qualified or
otherwise in accordance with the Certificate of Incorporation and the Bylaws of
the Surviving Corporation.
(b) Notwithstanding any provision of this Agreement to the contrary,
Niagara Bancorp may elect, subject to the filing of all necessary applications
and the receipt of all required regulatory approvals, to modify the structure of
the transactions contemplated hereby, and the parties shall enter into such
alternative transactions, so long as (i) there are no adverse tax consequences
to any of the stockholders of ABC as a result of such modification, (ii) the
Merger Consideration is not thereby changed in kind or reduced in amount because
of such modification and (iii) such modification will not be likely to
materially delay or jeopardize receipt of any required regulatory approvals or
of the tax opinion required under Sections 6.02(d) and (i).
7
Section 2.02 Conversion of Shares. At the Merger Effective Date, by virtue
of the Company Merger and without any action on the part of ABC or the holders
of shares of ABC Common Stock:
(i) Each outstanding share of ABC Common Stock issued and
outstanding at the Merger Effective Date, except as provided in clause (a) (ii)
and (iii) of this Section, shall cease to be outstanding, shall cease to exist
and shall be converted into the right to receive $15.75 in cash
(referred to as the "Merger Consideration).
(ii) Any shares of ABC Common Stock which are owned or held by
either party hereto or any of their respective Subsidiaries (other than in a
fiduciary capacity or in connection with debts previously contracted) at the
Merger Effective Date shall cease to exist, the certificates for such shares
shall as promptly as practicable be canceled, such shares shall not be converted
into the Merger Consideration, and no cash or shares of capital stock of Niagara
Bancorp shall be issued or exchanged therefor.
(iii) The Surviving Corporation shall pay for any Dissenters'
Shares in accordance with Section 262 of the DGCL, and the holders thereof shall
not be entitled to receive any Merger Consideration; provided, that if appraisal
rights under Section 262 of the DGCL with respect to any Dissenters' Shares
shall have been effectively withdrawn or lost, such shares will thereupon cease
to be treated as Dissenters' Shares and shall be converted into the right to
receive the Merger Consideration pursuant to Section 2.02(a).
(iv) Each share of Niagara Bancorp Common Stock issued and
outstanding immediately before the Merger Effective Date shall remain an
outstanding share of Common Stock of Niagara Bancorp.
(v) The holders of certificates representing shares of ABC
Common Stock (any such certificate being hereinafter referred to as a
"Certificate") shall cease to have any rights as stockholders of ABC, except
such rights, if any, as they may have pursuant to applicable law.
Section 2.03 Exchange Procedures.
(a) As promptly as practicable after the Effective Date, and in any
event within ten calendar days of the Merger Effective Date, an Exchange Agent
designated by Niagara Bancorp shall mail to each holder of record of an
outstanding share Certificate or Certificates a Letter of Transmittal containing
instructions for the surrender of the Certificate or Certificates held by such
holder for payment therefor. Upon surrender of the Certificate or Certificates
to the Exchange Agent in accordance with the instructions set forth in the
Letter of Transmittal, such holder shall promptly receive in exchange therefor
the Merger Consideration, without interest thereon. Adequate provisions shall be
made to permit Certificates to be surrendered in person to the Exchange Agent no
later than the next business day after the Merger Effective Date. Approval of
this Agreement by the stockholders of ABC shall constitute authorization for
Niagara Bancorp to designate and appoint such Exchange Agent. Neither Niagara
Bancorp nor the Exchange Agent shall be obligated to
8
deliver the Merger Consideration to a former stockholder of ABC until such
former stockholder surrenders his Certificate or Certificates or, in lieu
thereof, any such appropriate affidavit of loss and indemnity agreement and bond
as may be reasonably required by Niagara Bancorp.
(b) If payment of the Merger Consideration is to be made to a person
other than the person in whose name a Certificate surrendered in exchange
therefore is registered, it shall be a condition of payment that the Certificate
so surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for transfer, and that the
person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate surrendered, or required for any other reason, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(c) On or prior to the Merger Effective Date, Niagara Bancorp shall
deposit or cause to be deposited, in trust with the Exchange Agent, an amount of
cash equal to the aggregate Merger Consideration that the ABC stockholders shall
be entitled to receive on the Merger Effective Date pursuant to Section 2.02
hereof.
(d) The payment of the Merger Consideration upon the conversion of ABC
Common Stock in accordance with the above terms and conditions shall be deemed
to have been issued and paid in full satisfaction of all rights pertaining to
such ABC Common Stock.
(e) Promptly following the date which is twelve months after the Merger
Effective Date, the Exchange Agent shall deliver to Niagara Bancorp all cash,
certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing shares of ABC
Common Stock may surrender such Certificate to Niagara Bancorp and (subject to
applicable abandoned property, escheat and similar laws) receive in
consideration therefore the Merger Consideration multiplied by the number of
shares of ABC Common Stock formerly represented by such Certificate, without any
interest or dividends thereon.
(f) After the close of business on the Merger Effective Date, there
shall be no transfers on the stock transfer books of ABC of the shares of ABC
Common Stock which are outstanding immediately prior to the Merger Effective
Date, and the stock transfer books of ABC shall be closed with respect to such
shares. If, after the Merger Effective Date, Certificates representing such
shares are presented for transfer to the Exchange Agent, they shall be canceled
and exchanged for the Merger Consideration as provided in this Article II.
(g) In the event any certificate for ABC Common Stock shall have been
lost, stolen or destroyed, the Exchange Agent shall deliver (except as otherwise
provided in Section 2.02(iii)) in exchange for such lost, stolen or destroyed
certificate, upon the making of an affidavit of the fact by the holder thereof,
the cash to be paid in the Company Merger as provided for herein; provided,
however, that Niagara Bancorp may, in its sole discretion and as a condition
precedent to the
9
delivery thereof, require the owner of such lost, stolen or destroyed
certificate to deliver a bond in such reasonable sum as Niagara Bancorp as
indemnity against any claim that may be made against ABC, Niagara Bancorp or any
other party with respect to the certificate alleged to have been lost,
stolen or destroyed.
(h) Niagara Bancorp is hereby authorized to adopt additional rules and
regulations with respect to the matters referred to in this Section 2.03 not
inconsistent with the provisions of this Agreement and which do not adversely
affect the stockholders of ABC.
Section 2.04 Stock Options. At the Merger Effective Date, each option
granted by ABC (an "ABC Option") to purchase shares of ABC Common Stock issued
and outstanding pursuant to the 1993 Stock Option Plan (the "ABC Stock Option
Plan"), whether or not such option is exercisable on the Merger Effective Date,
shall, by reason of the Company Merger, cease to be outstanding and be converted
into the right to receive in cash an amount equal to (i) the difference (if a
positive number) between (A) $15.75 and (B) the exercise price of each such
option multiplied by (ii) the number of shares of ABC Common Stock subject to
the option.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ABC AND ALBION FEDERAL
ABC and Albion Federal represent and warrant to Niagara Bancorp and
Lockport Savings that the statements contained in this Article III are correct
and complete as of the date of this Agreement and will be correct and complete
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 III), except
as set forth in the ABC Disclosure Schedules delivered by ABC to Niagara Bancorp
on the date hereof, and except as to any representation or warranty which
specifically relates to an earlier date. ABC and Albion Federal have made a good
faith effort to ensure that the disclosure on each schedule of the ABC
Disclosure Schedules corresponds to the section reference herein. However, for
purposes of the ABC Disclosure Schedules, any item disclosed on any schedule
therein is deemed to be fully disclosed with respect to all schedules under
which such item may be relevant.
Section 3.01 Organization.
(a) ABC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is duly registered as a
savings and loan holding company under the HOLA. ABC 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, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on ABC.
10
(b) Albion Federal is a federal savings association organized, validly
existing and in good standing under the laws of the United States. Except as set
forth in ABC DISCLOSURE SCHEDULE 3.01(b), Albion Federal is the only ABC
Subsidiary. The deposits of Albion Federal are insured by the FDIC through the
SAIF to the fullest extent permitted by law, and all premiums and assessments
required to be paid in connection therewith have been paid when due by Albion
Federal. Each other ABC Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization.
(c) Albion Federal is a member in good standing of the FHLB of New
York and owns the requisite amount of stock therein.
(d) Except as disclosed in ABC DISCLOSURE SCHEDULE 3.01(d), the
respective minute books of ABC and each ABC Subsidiary accurately records, in
all material respects, all material corporate actions of their respective
shareholders and boards of directors (including committees) through the date of
this Agreement.
(e) Prior to the date of this Agreement, ABC has made available to
Niagara Bancorp true and correct copies of the certificate of incorporation and
bylaws of ABC and Albion Federal.
Section 3.02 Capitalization.
(a) The authorized capital stock of ABC consists of 3,000,000 shares of
common stock, $0.01 par value ("ABC Common Stock"), of which 753,058 shares are
outstanding, validly issued, fully paid and nonassessable and free of preemptive
rights, and 500,000 shares of preferred stock, $0.01 par value ("ABC Preferred
Stock"), of which no shares are outstanding. There are 39,105 shares of ABC
Common Stock held by ABC as treasury stock. Neither ABC nor any ABC Subsidiary
has or is bound by any Right of any character relating to the purchase, sale or
issuance or voting of, or right to receive dividends or other distributions on
any shares of ABC Common Stock, or any other security of ABC or any securities
representing the right to vote, purchase or otherwise receive any shares of ABC
Common Stock or any other security of ABC, other than shares issuable under the
ABC Stock Option Plan and other than as set forth in reasonable detail in the
ABC DISCLOSURE SCHEDULE 3.02(a). ABC DISCLOSURE SCHEDULE 3.02(a) sets forth the
name of each holder of options to purchase ABC Common Stock, the number of
shares each such individual may acquire pursuant to the exercise of such
options, the vesting dates, and the exercise price relating to the options held.
(b) Except as provided in ABC DISCLOSURE SCHEDULE 3.02(b), ABC owns all
of the capital stock of Albion Federal, free and clear of any lien or
encumbrance. Except for the ABC Subsidiaries, ABC does not possess, directly or
indirectly, any material equity interest in any corporation, except for equity
interests held in the investment portfolios of ABC Subsidiaries, equity
interests held by ABC Subsidiaries in a fiduciary capacity, and equity interests
held in connection with the lending activities of ABC Subsidiaries, including
stock in the FHLB of New York.
11
(c) To ABC's knowledge, no Person or "group" (as that term is used in
Section 13(d)(3) of the Exchange Act), is the beneficial owner (as defined in
Section 13(d) of the Exchange Act) of 5% or more of the outstanding shares of
ABC Common Stock, except as disclosed in the ABC
DISCLOSURE SCHEDULE 3.02(c).
Section 3.03 Authority; No Violation.
(a) ABC has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by ABC and the completion by ABC and
Albion Federal of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors of ABC and Albion Federal and, except
for approval of the shareholders of ABC and Albion Federal, no other corporate
proceedings on the part of ABC are necessary to complete the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by ABC, and the Bank Merger has been duly and validly approved by the
Board of Directors of Albion Federal, and subject to approval by the
shareholders of ABC and receipt of the required approvals of Regulatory
Authorities described in Section 4.03 hereof, constitutes the valid and binding
obligations of ABC and Albion Federal, enforceable against ABC and Albion
Federal in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally, and as to
Albion Federal, the conservatorship or receivership provisions of the FDIA, and
subject, as to enforceability, to general principles of equity.
(b) (A) The execution and delivery of this Agreement by ABC, (B)
subject to receipt of approvals from the Regulatory Authorities referred to in
Section 4.03 hereof and ABC's and Niagara Bancorp's compliance with any
conditions contained therein, the consummation of the transactions contemplated
hereby, and (C) compliance by ABC and Albion Federal with any of the terms or
provisions hereof will not (i) conflict with or result in a breach of any
provision of the certificate of incorporation or bylaws of ABC or any ABC
Subsidiary or the charter and bylaws of Albion Federal; (ii) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to ABC or any ABC Subsidiary or any of their respective
properties or assets; or (iii) violate, conflict with, result in a breach of any
provisions of, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default), under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of ABC or Albion Federal 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 ABC or Albion Federal is a party, or by which they or any of
their respective properties or assets may be bound or affected, except for such
violations, conflicts, breaches or defaults under clause (ii) or (iii) hereof
which, either individually or in the aggregate, will not have a Material Adverse
Effect on ABC and the ABC Subsidiaries taken as a whole.
Section 3.04 Consents. Except for the consents, waivers, approvals, filings
and registrations from or with the Regulatory Authorities referred to in Section
4.03 hereof and compliance with any
12
conditions contained therein, and the approval of this Agreement by the
requisite vote of the shareholders of ABC and Albion Federal, no consents,
waivers or approvals of, or filings or registrations with, any governmental
authority are necessary, and, to ABC's knowledge, no consents, waivers or
approvals of, or filings or registrations with, any other third parties are
necessary, in connection with (a) the execution and delivery of this Agreement
by ABC, and (b) the completion by ABC and Albion Federal of the transactions
contemplated hereby. ABC has no reason to believe that (i) any required consents
or approvals will not be received, or that (ii) any public body or authority,
the consent or approval of which is not required or any filing which is not
required, will object to the completion of the transactions contemplated by this
Agreement.
Section 3.05 Financial Statements.
(a) ABC has previously made available to Niagara Bancorp the ABC
Regulatory Reports. The ABC Regulatory Reports have been, or will be, prepared
in all material respects in accordance with applicable regulatory accounting
principles and practices throughout the periods covered by such statements, and
fairly present, or will fairly present in all material respects, the
consolidated financial position, results of operations and changes in
shareholders' equity of ABC as of and for the periods ended on the dates
thereof, in accordance with applicable regulatory accounting principles applied
on a consistent basis.
(b) ABC has previously made available to Niagara Bancorp the ABC
Financials. The ABC Financials have been, or will be, prepared in accordance
with GAAP, and (including the related notes where applicable) fairly present, or
will 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 ABC and
the ABC Subsidiaries as of and for the respective periods ending on the dates
thereof, in accordance with GAAP applied on a consistent basis during the
periods involved, except as indicated in the notes thereto, or in the case of
unaudited statements, as permitted by Form 10-Q.
(c) At the date of each balance sheet included in the ABC Financials or
the ABC Regulatory Reports, ABC did not have, or will 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 ABC
Financials or ABC 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 or which are incurred in the
ordinary course of business, consistent with past practice, and except for
liabilities, obligations and loss contingencies which are within the subject
matter of a specific representation and warranty herein and subject, in the case
of any unaudited statements, to normal, recurring audit adjustments and the
absence of footnotes.
Section 3.06 Taxes. ABC and the ABC Subsidiaries are members of the
same affiliated group within the meaning of IRC Section 1504(a). ABC has duly
filed all federal, state and material local tax returns required to be filed by
or with respect to ABC and all ABC Subsidiaries on or prior
13
to the Closing Date (all such returns being accurate and correct in all material
respects) and has duly paid or will pay, or made or will make, provisions for
the payment of all material federal, state and local taxes which have been
incurred by or are due or claimed to be due from ABC and any ABC Subsidiary by
any taxing authority or pursuant to any written tax sharing agreement on or
prior to the Closing Date other than taxes or other charges which (i) are not
delinquent, (ii) are being contested in good faith, or (iii) have not yet been
fully determined. As of the date of this Agreement, there is no audit
examination, deficiency assessment, tax investigation or refund litigation with
respect to any taxes of ABC or any of its Subsidiaries, and no claim has been
made by any authority in a jurisdiction where ABC or any of its Subsidiaries do
not file tax returns that ABC or any such Subsidiary is subject to taxation in
that jurisdiction. Except as set forth in ABC's DISCLOSURE SCHEDULE 3.06, ABC
and its Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any material tax due that is
currently in effect. ABC and each of its Subsidiaries has withheld and paid all
taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party, and ABC and each of its Subsidiaries has timely complied with all
applicable information reporting requirements under Part III, Subchapter A of
Chapter 61 of the IRC and similar applicable state and local information
reporting requirements.
Section 3.07. No Material Adverse Effect. ABC and the ABC Subsidiaries,
taken as a whole, have not suffered any Material Adverse Effect since December
31, 1998.
Section 3.08. Contracts.
(a) Except as set forth in ABC DISCLOSURE SCHEDULE 3.08(a), neither ABC nor
any ABC Subsidiary is a party to or subject to: (i) any employment, consulting
or severance contract or material arrangement with any past or present officer,
director or employee of ABC or any ABC Subsidiary, except for "at will"
arrangements; (ii) any plan, material arrangement or contract providing for
bonuses, pensions, options, deferred compensation, retirement payments, profit
sharing or similar material arrangements for or with any past or present
officers, directors or employees of ABC or any ABC Subsidiary; (iii) any
collective bargaining agreement with any labor union relating to employees of
ABC or any ABC Subsidiary; (iv) any agreement which by its terms limits the
payment of dividends by ABC or Albion Federal; (v) any instrument evidencing or
related to material indebtedness for borrowed money whether directly or
indirectly, by way of purchase money obligation, conditional sale, lease
purchase, guaranty or otherwise, in respect of which ABC or any ABC Subsidiary
is an obligor to any person, which instrument evidences or relates to
indebtedness other than deposits, repurchase agreements, bankers' acceptances,
advances from the FHLB of New York, and "treasury tax and loan" accounts
established in the ordinary course of business and transactions in "federal
funds" or which contains financial covenants or other restrictions (other than
those relating to the payment of principal and interest when due) which would be
applicable on or after the Closing Date to Niagara Bancorp or any Niagara
Bancorp Subsidiary; or (vi) any contract (other than this Agreement) limiting
the freedom, in any material respect, of ABC or Albion Federal to engage in any
type of banking or bank-related business which ABC or Albion Federal is
permitted to engage in under applicable law as of the date of this Agreement.
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(b) True and correct copies of agreements, plans, contracts,
arrangements and instruments referred to in Section 3.08(a), have been made
available to Niagara Bancorp on or before the date hereof, are listed on ABC
DISCLOSURE SCHEDULE 3.08(a) and are in full force and effect on the date hereof
and neither ABC nor any ABC Subsidiary (nor, to the knowledge of ABC, any other
party to any such contract, plan, arrangement or instrument) has materially
breached any provision of, or is in default in any respect under any term of,
any such contract, plan, arrangement or instrument. Except as set forth in the
ABC DISCLOSURE SCHEDULE 3.08(b), no party to any material contract, plan,
arrangement or instrument will have the right to terminate any or all of the
provisions of any such contract, plan, arrangement or instrument as a result of
the execution of, and the transactions contemplated by, this Agreement. Except
as set forth in ABC DISCLOSURE SCHEDULE 3.08(b), none of the employees
(including officers) of ABC or any ABC Subsidiary, possess the right to
terminate their employment and receive or be paid (or cause ABC or any ABC
Subsidiary to accrue on their behalf) benefits solely as a result of the
execution of this Agreement or the consummation of the transactions contemplated
thereby. Except as set forth in ABC DISCLOSURE SCHEDULE 3.08(b), no plan,
contract, employment agreement, termination agreement, or similar agreement or
arrangement to which ABC or any ABC Subsidiary is a party or under which ABC or
any ABC Subsidiary may be liable contains provisions which permit an employee or
independent contractor to terminate it without cause and continue to accrue
future benefits thereunder. Except as set forth in ABC DISCLOSURE SCHEDULE
3.08(b), no such agreement, plan, contract, or arrangement (x) provides for
acceleration in the vesting of benefits or payments due thereunder upon the
occurrence of a change in ownership or control of ABC or any ABC Subsidiary or
upon the occurrence of a subsequent event; or (y) requires ABC or any ABC
Subsidiary to provide a benefit in the form of ABC Common Stock or determined by
reference to the value of ABC Common Stock. No such agreement, plan or
arrangement with respect to officers or directors of ABC or to its employees,
provides for benefits which may cause an "excess parachute payment" or the
disallowance of a federal income tax deduction under IRC Section 280G.
Section 3.09 Ownership of Property; Insurance Coverage.
(a) Except as disclosed in ABC DISCLOSURE SCHEDULE 3.09, ABC and the
ABC Subsidiaries have good and, as to real property, marketable title to all
material assets and properties owned by ABC or any ABC Subsidiary in the conduct
of their businesses, whether such assets and properties are real or personal,
tangible or intangible, including assets and property reflected in the balance
sheets contained in the ABC Regulatory Reports and in the ABC Financials or
acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of in the ordinary course of business, since the
date of such balance sheets), subject to no material encumbrances, liens,
mortgages, security interests or pledges, except (i) those items which secure
liabilities for public or statutory obligations or any discount with, borrowing
from or other obligations to FHLB of New York, inter-bank credit facilities, or
any transaction by an ABC Subsidiary acting in a fiduciary capacity, and (ii)
statutory liens for amounts not yet delinquent or which are being contested in
good faith. ABC and the ABC Subsidiaries, as lessee, have the right under valid
and subsisting leases of real and personal properties used by ABC and its
Subsidiaries in the conduct of their businesses to occupy or use all such
properties as presently occupied and used
15
by each of them. Except as disclosed in ABC DISCLOSURE SCHEDULE 3.09, 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 the notes to the ABC Financials.
(b) With respect to all material agreements pursuant to which ABC or
any ABC Subsidiary has purchased securities subject to an agreement to resell,
if any, ABC or such ABC Subsidiary, as the case may be, has a lien or security
interest (which to ABC'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.
(c) ABC and each ABC Subsidiary currently maintains insurance
considered by ABC to be reasonable for their respective operations, in
accordance with good business practice. ABC has not received notice from any
insurance carrier that (i) such insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. There are presently
no material claims pending under such policies of insurance and no notices have
been given by ABC under such policies. All such insurance is valid and
enforceable and in full force and effect, and within the last three years ABC
has received each type of insurance coverage for which it has applied and during
such periods has not been denied indemnification for any material claims
submitted under any of its insurance policies. ABC DISCLOSURE SCHEDULE 3.09
identifies all policies of insurance maintained by ABC and each ABC Subsidiary.
Section 3.10 Legal Proceedings. Except as disclosed in ABC DISCLOSURE
SCHEDULE 3.10, neither ABC nor any ABC Subsidiary is a party to any, and there
are no pending or, to the best of ABC'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 ABC or any ABC Subsidiary, (ii) to which ABC or any ABC Subsidiary's
assets are or may be subject, (iii) challenging the validity or propriety of any
of the transactions contemplated by this Agreement, or (iv) which could
adversely affect the ability of ABC to perform under this Agreement, except for
any proceedings, claims, actions, investigations or inquiries referred to in
clauses (i) or (ii) which, if adversely determined, individually or in the
aggregate, would not be reasonably expected to have a Material Adverse Effect on
ABC and the ABC Subsidiaries, taken as a whole.
Section 3.11 Compliance With Applicable Law.
(a) ABC and ABC Subsidiaries hold all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under, and have complied in all material respects with, applicable laws,
statutes, orders, rules or regulations of any federal, state or local
governmental authority relating to them, other than where such failure to hold
or such noncompliance will neither result in a limitation in any material
respect on the conduct of their
16
respective businesses nor otherwise have a Material Adverse Effect on ABC and
the ABC Subsidiaries, taken as a whole.
(b) Except as disclosed in ABC DISCLOSURE SCHEDULE 3.11, neither ABC
nor any ABC Subsidiary has received any notification or communication from any
Regulatory Authority (i) asserting that ABC or any ABC Subsidiary is not in
material compliance with any of the statutes, regulations or ordinances which
such Regulatory Authority enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization which is material to ABC or any
ABC Subsidiary; (iii) requiring or threatening to require ABC or any ABC
Subsidiary, or indicating that ABC or any ABC Subsidiary may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement with any federal or state governmental agency or authority
which is charged with the supervision or regulation of banks or engages in the
insurance of bank deposits restricting or limiting, or purporting to restrict or
limit, in any material respect the operations of ABC or any ABC Subsidiary,
including without limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct, restrict or
limit, in any manner the operations of ABC or any ABC Subsidiary, including
without limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement"). Neither ABC nor any ABC
Subsidiary has consented to or entered into any currently effective Regulatory
Agreement, except as set forth in ABC DISCLOSURE SCHEDULE 3.11. The most recent
regulatory rating given to Albion Federal as to compliance with the Community
Reinvestment Act ("CRA") is satisfactory or better.
Section 3.12 ERISA.
(a) ABC's DISCLOSURE SCHEDULE 3.12 contains a complete and accurate
list of all pension, retirement, stock option, stock purchase, stock ownership,
savings, stock appreciation right, profit sharing, deferred compensation,
consulting, bonus, group insurance, severance and other benefit plans,
contracts, agreements and arrangements, including, but not limited to, "employee
benefit plans," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), incentive and welfare policies,
contracts, plans and arrangements and all trust agreements related thereto with
respect to any present or former directors, officers or other employees of ABC
or any of its Subsidiaries (hereinafter collectively referred to as the "ABC
Employee Plans"). If such plan, contract, agreement or arrangement is funded
through a trust or third party funding vehicle, such as an insurance contract, a
copy of the trust or other funding arrangement (including all amendments
thereto) and the latest financial statements thereof.
All of the ABC Employee Plans comply in all material respects with all
applicable requirements of ERISA, the IRC and other applicable laws; there has
occurred no "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the IRC) which is likely to result in the imposition of any
penalties or taxes under Section 502(i) of ERISA or Section 4975 of
the IRC upon ABC or any of its Subsidiaries.
17
No liability under Title IV of ERISA has been incurred by ABC or any of its
Subsidiaries with respect to any ABC Employee Plan which is subject to Title IV
of ERISA, or with respect to any "single-employer plan" (as defined in Section
4001(a) of ERISA) ("ABC Pension Plan") currently or formerly maintained by ABC
or any entity which is considered one employer with ABC under Section 4001(b)(1)
of ERISA or Section 414 of the IRC (an "ERISA Affiliate") since the effective
date of ERISA that has not been satisfied in full, and no condition exists that
presents a material risk to ABC or any ERISA Affiliate of incurring a liability
under such Title. No ABC Pension Plan had an "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived, as of the last day
of the end of the most recent plan year ending prior to the date hereof; the
fair market value of the assets of each ABC Pension Plan exceeds the present
value of the "benefit liabilities" (as defined in Section 4001(a)(16) of ERISA)
under such ABC Pension Plan as of the end of the most recent plan year with
respect to the respective ABC Pension Plan ending prior to the date hereof,
calculated on the basis of the actuarial assumptions used in the most recent
actuarial valuation for such ABC Pension Plan as of the date hereof; there is
not currently pending with the PBGC any filing with respect to any reportable
event under Section 4043 of ERISA nor has any reportable event occurred as to
which a filing is required and has not been made (other than as might be
required with respect to this Agreement and the transactions contemplated
thereby). Neither ABC nor any ERISA Affiliate has provided, or is required to
provide, security to any ABC Pension Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the IRC. Neither ABC nor any
ERISA Affiliate has contributed to any "multiemployer plan," as defined in
Section 3(37) of ERISA, on or after September 26, 1980. Except as set forth in
ABC DISCLOSURE SCHEDULE 3.12(a), neither ABC, nor any ERISA Affiliate, nor any
ABC Employee Plan, including any ABC Pension Plan, nor any trust created
thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which ABC, any ERISA Affiliate, and any ABC
Employee Plan, including any ABC Pension Plan any such trust or any trustee or
administrator thereof, could be subject to either a civil liability or penalty
pursuant to Section 409, 502(i) or 502(l) of ERISA or a tax imposed pursuant to
Chapter 43 of the IRC.
(b) Each ABC Employee Plan that is an "employee pension benefit plan"
(as defined in Section 3(2) of ERISA) and which is intended to be qualified
under Section 401(a) of the IRC (an "ABC Qualified Plan") has received a
favorable determination letter from the IRS, and ABC and its Subsidiaries are
not aware of any circumstances likely to result in revocation of any such
favorable determination letter. There is no pending or, to ABC's knowledge,
threatened litigation, administrative action or proceeding relating to any ABC
Employee Plan. There has been no announcement or commitment by ABC or any of its
Subsidiaries to create an additional ABC Employee Plan, or to amend any ABC
Employee Plan, except for amendments required by applicable law which do not
materially increase the cost of such ABC Employee Plan; and, except as
specifically identified in ABC's DISCLOSURE SCHEDULES, ABC and its Subsidiaries
do not have any obligations for post-retirement or post-employment benefits
under any ABC Employee Plan that cannot be amended or terminated upon 60 days'
notice or less without incurring any liability thereunder, except for coverage
required by Part 6 of Title I of ERISA or Section 4980B of the IRC, or similar
state laws, the cost of which is borne by the insured individuals. With respect
to each ABC Employee Plan, ABC has supplied to Niagara Bancorp a true and
correct copy of (A) the
18
annual report on the applicable form of the Form 5500 series filed with the IRS
for the most recent three plan years, if required to be filed, (B) such ABC
Employee Plan, including amendments thereto, (C) each trust agreement, insurance
contract or other funding arrangement relating to such ABC Employee Plan,
including amendments thereto, (D) the most recent summary plan description and
summary of material modifications thereto for such ABC Employee Plan, if the ABC
Employee Plan is subject to Title I of ERISA, (E) the most recent actuarial
report or valuation if such ABC Employee Plan is an ABC Pension Plan and any
subsequent changes to the actuarial assumptions contained therein and (F) the
most recent determination letter issued by the IRS if such Employee Plan is a
Qualified Plan.
(c) No compensation payable by ABC and any ABC Subsidiary to any of
their employees under any ABC Employee Plan (including by reason of the
transactions contemplated hereby) will be subject to disallowance under Section
162(m) of the IRC.
Section 3.13 Brokers, Finders and Financial Advisors. Except for ABC's
engagement of RP Financial, LC. ("RP") in connection with transactions
contemplated by this Agreement, neither ABC nor any ABC 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, except for its commitments disclosed in ABC
DISCLOSURE SCHEDULE 3.13, incurred any liability or commitment for any fees or
commissions to any such person in connection with the transactions contemplated
by this Agreement, which has not been reflected in the ABC Financials.
Section 3.14. Environmental Matters.
(a) With respect to ABC and each of the ABC Subsidiaries, and except as
set forth in ABC DISCLOSURE SCHEDULE 3.14:
(i) Each of ABC and its Subsidiaries, the Participation
Facilities, and, to ABC's knowledge, the Loan Properties are, and have been, in
substantial compliance with, and are not liable under, any Environmental Laws;
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
ABC's knowledge, threatened, before any court, governmental agency or board or
other forum against it or any of the ABC Subsidiaries or any Participation
Facility (x) for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the presence of or
release (as defined herein) into the environment of any Hazardous Material (as
defined herein), whether or not occurring at or on a site owned, leased or
operated by it or any of the ABC Subsidiaries or any Participation Facility;
(iii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
ABC's knowledge threatened, before any court, governmental agency or board or
other forum relating to or against any Loan Property (or ABC or
19
any of the ABC Subsidiaries in respect of such Loan Property) (x) relating to
alleged noncompliance (including by any predecessor) with, or liability under,
any Environmental Law or (y) relating to the presence of or release into the
environment of any Hazardous Material, whether or not occurring at or on a site
owned, leased or operated by a Loan Property;
(iv) To ABC's knowledge, the properties currently owned or
operated by ABC or any of the ABC Subsidiaries (including, without limitation,
soil, groundwater or surface water on, under or adjacent to the properties, and
buildings thereon) are not contaminated with and do not otherwise contain any
Hazardous Material other than as permitted under applicable Environmental Law;
(v) Neither ABC nor any of the ABC Subsidiaries has received
any notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign governmental
entity or any third party indicating that it may be in violation of, or
liable under, any Environmental Law;
(vi) To ABC's knowledge, there are no underground storage
tanks on, in or under any properties owned or operated by ABC or any of the ABC
Subsidiaries or any Participation Facility, and no underground storage tanks
have been closed or removed from any properties owned or operated by ABC or any
of the ABC Subsidiaries or any Participation Facility; and
(vii) To ABC's knowledge, during the period of (s) ABC's or
any of the ABC Subsidiaries' ownership or operation of any of their respective
current properties or (t) ABC's or any of the ABC Subsidiaries' participation in
the management of any Participation Facility, there has been no contamination by
or release of Hazardous Materials in, on, under or affecting such properties. To
ABC's knowledge, prior to the period of (x) ABC's or any of the ABC
Subsidiaries' ownership or operation of any of their respective current
properties or (y) ABC's or any of the ABC Subsidiaries' participation in the
management of any Participation Facility, there was no contamination by or
release of Hazardous Material in, on, under or affecting such properties.
(b) "Loan Property" means any property in which the applicable party
(or a Subsidiary of it) holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only with respect
to such property. "Participation Facility" means any facility in which the
applicable party (or a Subsidiary of it) participates in the management
(including all property held as trustee or in any other fiduciary capacity) and,
where required by the context, includes the owner or operator of such property,
but only with respect to such property.
Section 3.15. Loan Portfolio.
(a) With respect to each loan owned by ABC or any of the ABC
Subsidiaries in whole or in part (each, a "Loan"), to the best knowledge of ABC:
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(i) the note and the related security documents are each
legal, valid and binding obligations of the maker or obligor thereof,
enforceable against such maker or obligor in accordance with their terms;
(ii) neither ABC nor any of the ABC Subsidiaries, nor any
prior holder of a Loan, has modified the note or any of the related security
documents in any material respect or satisfied, canceled or subordinated the
note or any of the related security documents except as otherwise disclosed by
documents in the applicable Loan file;
(iii) ABC or any ABC Subsidiary is the sole holder of legal
and beneficial title to each Loan (or ABC's applicable participation interest,
as applicable), except as otherwise referenced
on the books and records of ABC;
(iv) the note and the related security documents, copies of
which are included in the Loan files, are true and correct copies of the
documents they purport to be and have not been suspended, amended, modified,
canceled or otherwise changed except as otherwise disclosed by
documents in the applicable Loan file;
(v) there is no pending or threatened condemnation proceeding
or similar proceeding affecting the property that serves as security for a Loan,
except as otherwise referenced on the books and records of ABC and its
Subsidiaries;
(vi) there is no litigation or proceeding pending or
threatened relating to the property that serves as security for a Loan that
would have a Material Adverse Effect upon the related Loan, except as otherwise
disclosed by documents in the applicable Loan file; and
(vii) with respect to a Loan held in the form of a
participation, the participation documentation is legal, valid, binding and
enforceable, except as otherwise disclosed by documents in the applicable Loan
file.
(b) The allowance for possible losses reflected in ABC's audited
statement of condition at December 31, 1998 was, and the allowance for possible
losses shown on the balance sheets in ABC's Securities Documents for periods
ending after December 31, 1998 have been and will be, adequate, as of the dates
thereof, under GAAP.
(c) ABC's DISCLOSURE SCHEDULE 3.15 sets forth by category the amounts
of all loans, leases, advances, credit enhancements, other extensions of credit,
commitments and interest-bearing assets of ABC and the ABC Subsidiaries that
have been classified (whether regulatory or internal) as "Special Mention,"
"Substandard," "Doubtful," "Loss" or words of similar import as of June 30,
1999. The other real estate owned ("OREO") included in any non-performing assets
of ABC or any of the ABC Subsidiaries is carried net of reserves at the lower of
cost or fair value, less estimated selling costs, based on current independent
appraisals or evaluations or current
21
management appraisals or evaluations; provided, however, that "current" shall
mean within the past 12 months.
Section 3.16. Information to be Supplied. The information to be
provided by ABC for inclusion in the Proxy Statement will not, at the time the
Proxy Statement is mailed to ABC shareholders, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein not misleading. The information supplied, or to be supplied,
by ABC for inclusion in the Applications will, at the time such documents are
filed with any Regulatory Authority, be accurate in all material aspects.
Section 3.17. Securities Documents. ABC has made available to Niagara
Bancorp copies of its (i) annual reports on Form 10-K for the years ended
December 31, 1998, 1997 and 1996, (ii) quarterly reports on Form 10-Q for the
quarters ended March 31, 1999 and June 30, 1999, and (iii) proxy materials used
or for use in connection with its meetings of shareholders held in 1999, 1998
and 1997. Such reports and such proxy materials complied, at the time filed with
the SEC, in all material respects, with the Securities Laws.
Section 3.18. Related Party Transactions. Except as disclosed in ABC
DISCLOSURE SCHEDULE 3.18, or as described in ABC's Proxy Statement distributed
in connection with the 1999 annual meeting of shareholders (which has previously
been provided to Niagara Bancorp), neither ABC nor any ABC Subsidiary is a party
to any transaction (including any loan or other credit accommodation) with any
Affiliate of ABC or any ABC Affiliate. Except as disclosed in ABC DISCLOSURE
SCHEDULE 3.18, all such transactions (a) were made in the ordinary course of
business, (b) were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other Persons, and (c) did not involve more than the normal
risk of collectability or present other unfavorable features. Except as set
forth on ABC DISCLOSURE SCHEDULE 3.18, no loan or credit accommodation to any
Affiliate of ABC or any ABC 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 ABC nor any ABC Subsidiary
has been notified that principal and interest with respect to any such loan or
other credit accommodation will not be paid when due or that the loan grade
classification accorded such loan or credit accommodation by ABC is
inappropriate.
Section 3.19. Schedule of Termination Benefits. ABC DISCLOSURE SCHEDULE
3.19 includes a schedule of all termination benefits and related payments that
would be payable to the individuals identified thereon, excluding any options to
acquire ABC Common Stock granted to such individuals, under any and all
employment agreements, special termination agreements, supplemental executive
retirement plans, deferred bonus plans, deferred compensation plans, salary
continuation plans, or any compensation arrangement, or other pension benefit or
welfare benefit plan maintained by ABC or any ABC Subsidiary for the benefit of
officers or directors of ABC or any ABC Subsidiary (the "Benefits Schedule"),
assuming their employment or service is terminated as of December 31, 1999 and
the Closing Date occurs prior to such termination. No other individuals are
entitled to benefits under any such plans.
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Section 3.20. Deposits. None of the deposits of ABC or any ABC Subsidiary
is a "brokered" deposit as defined in 12 U.S. Code Section 1831f(g).
Section 3.21. Antitakeover Provisions Inapplicable. Except as set forth on
ABC DISCLOSURE SCHEDULE 3.21, the transactions contemplated by this Agreement
are not subject to any applicable state takeover law.
Section 3.22. Fairness Opinion. ABC has received a written opinion from
RP to the effect that, subject to the terms, conditions and qualifications set
forth therein, as of the date thereof, the Merger Consideration to be received
by the stockholders of ABC pursuant to this Agreement is fair to such
stockholders from a financial point of view. Such opinion has not been amended
or rescinded as of the date of this Agreement.
Section 3.23. Year 2000. (a) Each of ABC and each ABC Subsidiary has
adopted a plan (in each case, a "Year 2000 Plan") requiring testing,
information-gathering and other procedures to conform to the deadlines and
material requirements and guidelines applicable to it as a provider of services
using Information Technology and imposed by any Bank Regulator or the Federal
Financial Institutions Examination Council ("FFIEC"), to cause such Information
Technology to be Year 2000 Compliant (such deadlines, material requirements and
guidelines, as they may be in effect from time to time, being referred to in
this Agreement as the "Year 2000 Regulatory Requirements").
(b) Each of ABC and each ABC Subsidiary has taken appropriate actions
and has committed the resources reasonably necessary or otherwise appropriate to
comply with its Year 2000 Plan in a timely manner. Such actions (including the
testing and information-gathering procedures) have not produced any preliminary
findings or other results which would indicate that the Information Technology
will not be Year 2000 Compliant or that it will not be in compliance with the
Year 2000 Regulatory Requirements; and it has not received any written notice or
preliminary oral notice from a Regulatory Authority to one of its officers or
senior executive employees with respect to any adverse action against it
relating to Year 2000 Compliance.
(c) Each of ABC and Albion Federal has taken appropriate actions to
assure that Albion Federal has, and will continue to have at all relevant points
in time, adequate funds to meet anticipated loan and deposit customer demand in
connection with the Year 2000 date change and
related circumstances.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LOCKPORT SAVINGS AND
NIAGARA BANCORP
Niagara Bancorp and Lockport Savings represent and warrant to ABC and
Albion Federal that the statements contained in this Article IV are correct and
complete as of the date of this Agreement and will be correct and complete 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),
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except as set forth in the Niagara Bancorp Disclosure Schedules delivered by
Niagara Bancorp to ABC on the date hereof. Niagara Bancorp and Lockport Savings
have made a good faith effort to ensure that the disclosure on each schedule of
the Niagara Bancorp Disclosure Schedules corresponds to the section referenced
herein. However, for purposes of the Niagara Bancorp Disclosure Schedules, any
item disclosed on any schedule therein is deemed to be fully disclosed with
respect to all schedules under which such item may be relevant.
Section 4.01. Organization.
(a) Niagara Bancorp 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. Niagara Bancorp 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, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Niagara
Bancorp.
(b) Lockport Savings is a stock savings bank duly organized, validly
existing and in good standing under the laws of the State of New York. The
deposits of Lockport Savings are insured by the FDIC through the BIF to the
fullest extent permitted by law, and all premiums and assessments required to be
paid in connection therewith have been paid when due by Lockport Savings. Each
other Niagara Bancorp Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization.
(c) Lockport Savings is a member in good standing of the FHLB of New
York and owns the requisite amount of stock therein.
(d) Prior to the date of this Agreement, Niagara Bancorp has delivered
to ABC true and correct copies of the certificate of incorporation and bylaws of
Niagara Bancorp.
(e) Niagara Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with its
principal executive offices in Lockport, New York. Niagara Merger Subsidiary is
a wholly-owned subsidiary of Niagara
Bancorp.
Section 4.02 Authority; No Violation.
(a) Niagara Bancorp and Niagara Merger Subsidiary have full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Niagara Bancorp and Niagara Merger Subsidiary and the completion by Niagara
Bancorp and Niagara Merger Subsidiary of the transactions contemplated hereby
have been duly and validly approved by the Board of Directors of Niagara Bancorp
and Niagara Merger Subsidiary and, no other corporate proceedings on the part of
Niagara Bancorp or Niagara Merger Subsidiary are necessary to complete the
transactions
24
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Niagara Bancorp and Niagara Merger Subsidiary and, subject to
receipt of the required approvals of Regulatory Authorities described in Section
4.03 hereof, constitutes the valid and binding obligation of Niagara Bancorp and
Niagara Merger Subsidiary, enforceable against Niagara Bancorp and Niagara
Merger Subsidiary in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally.
(b) (A) The execution and delivery of this Agreement by Niagara Bancorp
and Niagara Merger Subsidiary, (B) subject to receipt of approvals from the
Regulatory Authorities referred to in Section 4.03 hereof and ABC's and Niagara
Bancorp's and Niagara Merger Subsidiary's compliance with any conditions
contained therein, the consummation of the transactions contemplated hereby, and
(C) compliance by Niagara Bancorp and Niagara Merger Subsidiary with any of the
terms or provisions hereof will not (i) conflict with or result in a breach of
any provision of the certificate of incorporation or bylaws of Niagara Bancorp
or any Niagara Bancorp Subsidiary or the charter and bylaws of Lockport Savings;
(ii) violate any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to Niagara Bancorp or any Niagara Bancorp
Subsidiary or any of their respective properties or assets; or (iii) violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default), under, result in the termination of, accelerate the performance
required by, or result in a right of termination or acceleration or the creation
of any lien, security interest, charge or other encumbrance upon any of the
properties or assets of Niagara Bancorp, Niagara Merger Subsidiary or Lockport
Savings 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 Niagara Bancorp, Niagara Merger Subsidiary or
Lockport Savings is a party, or by which they or any of their respective
properties or assets may be bound or affected, except for such violations,
conflicts, breaches or defaults under clause (ii) or (iii) hereof which, either
individually or in the aggregate, will not have a Material Adverse Effect on
Niagara Bancorp.
Section 4.03. Consents. Except for consents, approvals, filings and
registrations from or with the Superintendent, FDIC, FRB, SEC, OTS and state
"blue sky" authorities, and compliance with any conditions contained therein,
and the approval of this Agreement by the shareholders of ABC, the filing of a
certificate of merger with the Office of the Delaware Secretary of State
pursuant to the DGCL, and the certificate of merger with the Secretary of State
of the State of Delaware, no consents or approvals of, or filings or
registrations with, any public body or authority are necessary, and no consents
or approvals of any third parties are necessary, or will be, in connection with
(a) the execution and delivery of this Agreement by Niagara Bancorp and Niagara
Merger Subsidiary, and (b) the completion by Niagara Bancorp and Niagara Merger
Subsidiary of the transactions contemplated hereby. Niagara Bancorp has no
reason to believe that (i) any required consents or approvals will not be
received or will be received with conditions, limitations or restrictions
unacceptable to it or which would adversely impact Niagara Bancorp's ability to
complete the transactions contemplated by this Agreement or that (ii) any public
body or authority, the consent or approval of which is not required or any
filing which is not required, will object to the completion of the transactions
contemplated by this Agreement.
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Section 4.04. Financial Statements.
(a) Niagara Bancorp has made available to ABC the Niagara Bancorp
Financials. The Niagara Bancorp Financials have been, or will be, prepared in
accordance with GAAP and practices applied on a consistent basis throughout the
periods covered by such statements, and (including the related notes where
applicable) fairly present, or will 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 Niagara Bancorp and the Niagara Bancorp
Subsidiaries as of and for the respective periods ending on the dates thereof,
in accordance with GAAP applied on a consistent basis during the periods
involved, except as indicated in the notes thereto, or in the case of unaudited
statements, as permitted by Form 10-Q.
Section 4.05. Compliance With Applicable Law.
(a) Niagara Bancorp and the Niagara Bancorp Subsidiaries hold all
licenses, franchises, permits and authorizations necessary for the lawful
conduct of their businesses under, and have complied in all material respects
with, applicable laws, statutes, orders, rules or regulations of any federal,
state or local governmental authority relating to them, other than where such
failure to hold or such noncompliance will neither result in a limitation in any
material respect on the conduct of their businesses nor otherwise have a
Material Adverse Effect on Niagara Bancorp and its Subsidiaries taken as a
whole.
(b) Except as set forth in Niagara Bancorp DISCLOSURE SCHEDULE 4.05(b),
neither Niagara Bancorp nor any Niagara Bancorp Subsidiary has received any
notification or communication from any Regulatory Authority (i) asserting that
Niagara Bancorp or any Niagara Bancorp Subsidiary is not in compliance with any
of the statutes, regulations or ordinances which such Regulatory Authority
enforces; (ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to Niagara Bancorp or any Niagara
Bancorp Subsidiary; (iii) requiring or threatening to require Niagara Bancorp or
any Niagara Bancorp Subsidiary, or indicating that Niagara Bancorp or any
Niagara Bancorp Subsidiary may be required, to enter into a cease and desist
order, agreement or memorandum of understanding or any other agreement
restricting or limiting, or purporting to restrict or limit, in any manner the
operations of Niagara Bancorp or any Niagara Bancorp Subsidiary, including
without limitation any restriction on the payment of dividends; or (iv)
directing, restricting or limiting, or purporting to direct, restrict or limit,
in any manner the operations of Niagara Bancorp or any Niagara Bancorp
Subsidiary, including without limitation any restriction on the payment of
dividends (any such notice, communication, memorandum, agreement or order
described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither Niagara Bancorp nor any Niagara Bancorp Subsidiary is a
party to, nor has consented to any Regulatory Agreement. The most recent
regulatory rating given to Lockport Savings as to compliance with the CRA is
satisfactory or better.
Section 4.06. Information to be Supplied. The information to be supplied by
Niagara Bancorp for inclusion in the Proxy Statement will not, at the time the
Proxy Statement is mailed to ABC
26
shareholders, contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein not
misleading. The information supplied, or to be supplied, by Niagara Bancorp for
inclusion in the Applications will, at the time such documents are filed with
any Regulatory Authority, be accurate in all material aspects.
Section 4.07. Year 2000. (a) Each of Niagara Bancorp and each Niagara
Bancorp Subsidiary has adopted a plan (in each case, a "Year 2000 Plan")
requiring testing, information-gathering and other procedures to conform to the
deadlines and material requirements and guidelines applicable to it as a
provider of services using Information Technology and imposed by any Bank
Regulator or the FFIEC, to cause such Information Technology to be Year 2000
compliant (such deadlines, material requirements and guidelines, as they may be
in effect from time to time, being referred to in this Agreement as the "Year
2000 Regulatory Requirements").
(b) Each of Niagara Bancorp and each Niagara Bancorp Subsidiary has
taken appropriate actions and has committed the resources reasonably necessary
or otherwise appropriate to comply with its Year 2000 Plan in a timely manner.
Such actions (including the testing and information- gathering procedures) have
not produced any preliminary findings or other results which would indicate that
the Information Technology will not be Year 2000 compliant or that it will not
be in compliance with the Year 2000 Regulatory Requirements; and it has not
received any written notice or preliminary oral notice from a Regulatory
Authority to one of its officers or senior executive employees with respect to
any adverse action against it relating to Year 2000 compliance.
(c) Each of Niagara Bancorp and Lockport Savings has taken appropriate
actions to assure that the Lockport Savings has, and will continue to have at
all relevant points in time, adequate funds to meet anticipated loan and deposit
customer demand in connection with the Year
2000 date change and related circumstances.
Section 4.08. Financing. As of the date hereof Niagara Bancorp has, and
at the Merger Effective Date, Niagara Bancorp will have funds which are
sufficient and available to meet its obligations under this Agreement and to
consummate in a timely manner the transactions contemplated hereby and thereby,
and Niagara Bancorp and Lockport Savings will not fail to meet
their capital requirements as a result thereof.
Section 4.09. Regulatory Approvals. Niagara Bancorp and Lockport
Savings are not aware of any reason that they cannot obtain any of the approvals
of regulatory authorities necessary to consummate the Merger and neither Niagara
Bancorp nor Lockport Savings has received any advice or information from any
regulatory authority indicating that such approvals will be denied or are
doubtful.
27
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01. Conduct of ABC's Business.
(a) From the date of this Agreement to the Closing Date, ABC and each
ABC Subsidiary will conduct their business and engage in transactions, including
extensions of credit, only in the ordinary course and consistent with past
practice and policies, except as otherwise required or contemplated by this
Agreement or with the written consent of Niagara Bancorp. ABC, Albion Federal,
and each of the ABC Subsidiaries will use its reasonable good faith efforts, to
(i) preserve their business organizations intact, (ii) maintain good
relationships with employees, and (iii) preserve for themselves the good will of
their customers and others with whom business relationships exist. From the date
hereof to the Closing Date, except as otherwise consented to or approved by
Niagara Bancorp in writing (which approval will not be unreasonably delayed or
withheld) or as contemplated or required by this Agreement, ABC will not, and
ABC will not permit any ABC Subsidiary to:
(i) amend or change any provision of its certificate of incorporation,
charter, or bylaws;
(ii) except as set forth in ABC DISCLOSURE SCHEDULE 5.01(a)(ii), change
the number of authorized or issued shares of its capital stock 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, other than the
quarterly cash dividend of $0.03 per share payable by ABC (with payment and
record dates consistent with past practice) (it being the intention of the
parties that the holders of ABC Common Stock shall not fail to receive a
dividend if the Merger Effective Date occurs within fifteen days prior to a
record date that would have been established consistent with past practice), or
redeem or otherwise acquire any shares of capital stock, except that ABC may
issue shares of ABC Common Stock upon the valid exercise, in accordance with the
information set forth in ABC DISCLOSURE SCHEDULE 3.02, of presently outstanding
options to acquire ABC Common Stock under the ABC Stock Option Plan;
(iii) grant or agree to pay any bonus, severance or termination to, or
enter into or amend any employment agreement, severance agreement, supplemental
executive agreement, or similar agreement or arrangement with any of its
directors, officers or employees, or increase in any manner the compensation or
fringe benefits of any employee, officer or director, except as may be required
pursuant to legally binding commitments existing on the date hereof and set
forth on ABC DISCLOSURE SCHEDULES 3.08 and 3.12;
(iv) 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,
28
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; or materially amend
any ABC Employee Plan except to the extent such modifications or
amendments do not result in an increase in cost;
(v) except as otherwise provided in Section 5.06 of this Agreement,
merge or consolidate ABC or any ABC Subsidiary with any other corporation; sell
or lease all or any substantial portion of the assets or business of ABC or any
ABC Subsidiary; make any acquisition of all or any substantial portion of the
business or assets of any other person, firm, association, corporation or
business organization 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 ABC, or any ABC Subsidiary, and any other
person; enter into a purchase and assumption transaction with respect to
deposits and liabilities; permit the revocation or surrender by any ABC
Subsidiary of its certificate of authority to maintain, or file an application
for the relocation of, any existing branch office, or file an application for a
certificate of authority to establish a new branch office;
(vi) sell or otherwise dispose of the capital stock of ABC or sell or
otherwise dispose of any asset of ABC or of any ABC Subsidiary other than in the
ordinary course of business consistent with past practice; subject any asset of
ABC or of any ABC Subsidiary to a lien, pledge, security interest or other
encumbrance (other than in connection with deposits, repurchase agreements,
bankers acceptances, FHLB of New York advances, "treasury tax and loan" accounts
established in the ordinary course of business and transactions in "federal
funds" and the satisfaction of legal requirements in the exercise of trust
powers) other than in the ordinary course of business consistent with past
practice; incur any indebtedness for borrowed money (or guarantee any
indebtedness for borrowed money), except in the ordinary course of business
consistent with past practice;
(vii) take any action which would result in any of the representations
and warranties of ABC set forth in this Agreement becoming untrue as of any date
after the date hereof (except as to any representation or warranty which
specifically relates to an earlier date) or in any of the conditions set forth
in Article VI hereof not being satisfied, except in each case as may be required
by applicable law;
(viii) change any method, practice or principle of accounting, except
as may be required from time to time by GAAP (without regard to any optional
early adoption date) or any Regulatory Authority responsible for regulating ABC;
(ix) waive, release, grant or transfer any material rights of value or
modify or change in any material respect any existing material agreement or
indebtedness to which ABC or any ABC Subsidiary is a party, other than in the
ordinary course of business, consistent with past practice;
(x) purchase any security for its investment portfolio not rated "A" or
higher by either Standard & Poor's Corporation or Moody's Investor Services,
Inc;
29
(xi) make any new loan or other credit facility commitment (including
without limitation, lines of credit and letters of credit) to any borrower or
group of affiliated borrowers in excess of $50,000 in the aggregate, or
increase, compromise, extend, renew or modify any existing loan or commitment
outstanding in excess of $50,000, except for loans secured by one-to-four family
residential real property (on the basis of and consistent with existing lending
policies) and any commitment disclosed on the ABC DISCLOSURE SCHEDULE
5.01(a)(xi).
(xii) except as set forth on the ABC DISCLOSURE SCHEDULE 5.01(a)(xii),
enter into, renew, extend or modify any other transaction with any Affiliate;
(xiii) enter into any futures contract, option, interest rate caps,
interest rate floors, interest rate exchange agreement or other agreement or
take any other action for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest;
(xiv) except for the execution of, and as otherwise provided in, this
Agreement, take any action that would give rise to a right of payment to any
individual under any employment agreement, or take any action that would give
rise to a right of payment to any individual under any ABC
Employee Plan;
(xv) make any change in policies with regard to the extension of
credit, the establishment of reserves with respect to the possible loss thereon
or the charge off of losses incurred thereon investment, asset/liability
management or other material banking policies in any material respect except as
may be required by changes in applicable law or regulations or in GAAP or by
applicable regulatory authorities;
(xvi) except as set forth in ABC DISCLOSURE SCHEDULE 5.01(a)(xvi), 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 and other than expenditures necessary to maintain existing assets in good
repair;
(xvii) 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;
(xviii) sell any OREO or loan (other than loans secured by one- to
four-family real estate);
(xix) incur any non-deposit liability in excess of $250,000 other than
in the ordinary course of business consistent with past practice; or
(xx) agree to do any of the foregoing.
For purposes of this Section 5.01, unless provided for in a business
plan, budget or similar document delivered to Niagara Bancorp prior to the date
of this Agreement, it shall not be considered
30
in the ordinary course of business for ABC or any ABC Subsidiary to do any of
the following: (i) except as set forth in ABC DISCLOSURE SCHEDULE 5.01, make any
sale, assignment, transfer, pledge, hypothecation or other disposition of any
assets having a book or market value, whichever is greater, in the aggregate in
excess of $100,000, other than pledges of assets to secure government deposits,
to exercise trust powers, sales of assets received in satisfaction of debts
previously contracted in the normal course of business, issuance of loans, sales
of previously purchased government guaranteed loans, or transactions in the
investment securities portfolio by ABC or a ABC Subsidiary or repurchase
agreements made, in each case, in the ordinary course of business; or (ii)
undertake or enter any lease, contract or other commitment for its account,
other than in the normal course of providing credit to customers as part of its
banking business, involving a payment by ABC or any ABC Subsidiary of more than
$10,000 annually, or containing a material financial commitment and extending
beyond 12 months from the date hereof.
Section 5.02. Access; Confidentiality.
(a) Each of ABC and the ABC Subsidiaries shall permit Niagara Bancorp
and its representatives reasonable access to its properties, and shall disclose
and make available to them all books, papers and records relating to the assets,
properties, operations, obligations and liabilities of ABC and its subsidiaries,
including, but not limited to, all books of account (including the general
ledger), tax records, minute books of meetings of boards of directors (and any
committees thereof) (other than minutes of any confidential discussion of this
Agreement and the transactions contemplated hereby), and stockholders,
organizational documents, bylaws, material contracts and agreements, filings
with any regulatory authority, accountants' work papers, litigation files, plans
affecting employees, and any other business activities or prospects in which
Niagara Bancorp may have a reasonable interest (provided that ABC shall not be
required to provide access to any information that would violate its, or any ABC
Subsidiary's, attorney-client privilege). ABC and Albion Federal shall make
their respective officers, employees and agents and authorized representatives
(including counsel and independent public accountants) available to confer with
Niagara Bancorp and its representatives. Albion Federal shall send to the Senior
Vice President/Retail Banking of Lockport Savings copies of current rate sheets
for all deposit and loan products on a timely basis. The parties will hold all
such information delivered in confidence to the extent required by, and in
accordance with, the provisions of the confidentiality agreement, dated June 28,
1999, among ABC and Niagara Bancorp (the "Confidentiality Agreement").
(b) Niagara Bancorp agrees to conduct such investigations and
discussions hereunder in a manner so as not to interfere unreasonably with
normal operations and customer and employee relationships of the other party.
(c) In addition to the access permitted by subparagraph (a) above, from
the date of this Agreement through the Closing Date, ABC and each ABC Subsidiary
shall permit employees of Niagara Bancorp reasonable access to information
relating to problem loans, loan restructurings and
loan work-outs of ABC and Albion Federal.
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(d) If the transactions contemplated by this Agreement shall not be
consummated, ABC and Niagara Bancorp will each destroy or return all documents
and records obtained from the other party or its representatives, during the
course of its investigation and will cause all information with respect to the
other party obtained pursuant to this Agreement or preliminarily thereto to be
kept confidential, except to the extent such information becomes public through
no fault of the party to whom the information was provided or any of its
representatives or agents and except to the extent disclosure of any such
information is legally required. ABC and Niagara Bancorp shall each give prompt
written notice to the other party of any contemplated disclosure where such
disclosure is so legally required.
Section 5.03. Regulatory Matters and Consents.
(a) Niagara Bancorp and Lockport Savings will prepare all Applications
and make all filings for, and use their best efforts to obtain as promptly as
practicable after the date hereof, all necessary permits, consents, approvals,
waivers and authorizations of all Regulatory Authorities necessary or advisable
to consummate the transactions contemplated by this Agreement. Niagara Bancorp
shall file the Applications within forty-five days of the date of this
Agreement, or as soon thereafter as is practicable.
(b) ABC will furnish Niagara Bancorp with all information concerning
ABC and ABC Subsidiaries as may be necessary or advisable in connection with any
Application or filing made by or on behalf of Niagara Bancorp to any Regulatory
Authority in connection with the transactions contemplated by this Agreement.
(c) Niagara Bancorp and ABC will promptly furnish each other with
copies of all material written communications to, or received by them from any
Regulatory Authority in respect of the transactions contemplated hereby, except
information which is filed by either party which is designated as confidential.
(d) The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all third parties and Regulatory Authorities. Niagara Bancorp
will furnish ABC with (i) copies of all Applications prior to filing with any
Regulatory Authority and provide ABC a reasonable opportunity to provide changes
to such Applications, (ii) copies of all Applications filed by Niagara Bancorp
and (iii) copies of all documents filed by Niagara Bancorp under the Exchange
Act.
(e) ABC and Niagara Bancorp will cooperate with each other in the
foregoing matters and will furnish the responsible party with all information
concerning it and its subsidiaries as may be necessary or advisable in
connection with any Application or filing (including the Proxy Statement and any
report filed with the SEC) made by or on behalf of Niagara Bancorp or ABC to any
Regulatory Authority in connection with the transactions contemplated by this
Agreement, and
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such information will be accurate and complete in all material respects. In
connection therewith, each party will provide certificates and other documents
reasonably requested by the other.
Section 5.04. Taking of Necessary Action.
(a) Niagara Bancorp and ABC shall each use its best efforts in good faith,
and each of them shall cause its Subsidiaries to use their best efforts in good
faith, to (i) furnish such information as may be required in connection with the
preparation of the documents referred to in Section 5.03 of this Agreement, and
(ii) take or cause to be taken all action necessary or desirable on its part
using its best efforts so as to permit completion of the Merger and the
transactions contemplated by this Agreement, including, without limitation, (A)
obtaining the consent or approval of each individual, partnership, corporation,
association or other business or professional entity whose consent or approval
is required or desirable for consummation of the transactions contemplated
hereby (including assignment of leases without any change in terms), provided
that neither ABC nor any ABC Subsidiary shall agree to make any payments or
modifications to agreements in connection therewith without the prior written
consent of Niagara Bancorp, and (B) requesting the delivery of appropriate
opinions, consents and letters from its counsel and independent auditors. No
party hereto shall take, or cause, or to the best of its ability permit to be
taken, any action that would substantially impair the prospects of completing
the Company Merger pursuant to this Agreement; provided that nothing herein
contained shall preclude Niagara Bancorp or ABC from exercising its rights under
this Agreement.
(b) ABC shall prepare, subject to the review and consent of Niagara
Bancorp with respect to matters relating to Niagara Bancorp and the transactions
contemplated by this Agreement, a Proxy Statement to be filed by ABC with the
SEC and to be mailed to the shareholders of ABC in connection with the meeting
of its shareholders and transactions contemplated hereby, which Proxy Statement
shall conform to all applicable legal requirements. The parties shall cooperate
with each other with respect to the preparation of the Proxy Statement. ABC
shall, as promptly as practicable following the preparation thereof, file the
Proxy Statement with the SEC and ABC shall use all reasonable efforts to have
the Proxy Statement mailed to stockholders as promptly as practicable after such
filing. ABC will promptly advise Niagara Bancorp of the time when the Proxy
Statement has been filed and mailed, or of any comments from the SEC or any
request by the SEC for additional information.
Section 5.05. Certain Agreements.
(a) Niagara Bancorp shall maintain in effect for three years from the
Effective Time, if available, the current directors' and officers' liability
insurance policy maintained by ABC (provided that Niagara Bancorp 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 Closing Date; provided, however, that in no event shall Niagara Bancorp
be required to expend pursuant to this Section 5.05 more than the amount equal
to 150% of the current annual amount expended by ABC to maintain or procure
insurance coverage pursuant hereto. In connection with
33
the foregoing, ABC and Albion Federal each agrees to provide such insurer or
substitute insurer with such representations as such insurer may request with
respect to the reporting of any prior claims.
(b) From and after the Merger Effective Date, Niagara Bancorp agrees to
indemnify, defend and hold harmless each present and former director and officer
of ABC and its Subsidiaries determined as of the Closing Date (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees and expenses), liabilities, judgments or amounts paid
in settlement (with the approval of Niagara Bancorp, which approval shall not be
unreasonably withheld) or in connection with any claim, action, suit, proceeding
or investigation arising out of matters existing or occurring at or prior to the
Merger Effective Date (a "Claim") in which an Indemnified Party is, or is
threatened to be made, a party or a witness based in whole or in part on, or
arising in whole or in part out of, the fact that such person is or was a
director or officer of ABC or any of its subsidiaries, regardless of whether
such Claim is asserted or claimed prior to, at or after the Closing Date, to the
fullest extent to which directors and officers of ABC are entitled under the
DGCL, ABC's certificate of incorporation and bylaws, or other applicable law as
in effect on the date hereof (and Niagara Bancorp shall pay expenses in advance
of the final disposition of any such action or proceeding to each Indemnified
Party to the extent permissible to a Delaware corporation under the DGCL and
ABC's certificate of incorporation and bylaws as in effect on the date hereof;
provided, that the person to whom expenses are advanced provides an undertaking
to repay such expenses if it is ultimately determined that such person is not
entitled to indemnification). All rights to indemnification in respect of a
Claim asserted or made within the period described in the preceding sentence
shall continue until the final disposition of such Claim. No indemnification
shall be required under this Section 5.05 if prohibited by applicable law.
(c) Any Indemnified Party wishing to claim indemnification under
Section 5.05(b), upon learning of any Claim, shall promptly notify Niagara
Bancorp, but the failure to so notify shall not relieve Niagara Bancorp of any
liability it may have to such Indemnified Party except to the extent that such
failure materially prejudices Niagara Bancorp. In the event of any Claim, (1)
Niagara Bancorp shall have the right to assume the defense thereof (with counsel
reasonably satisfactory to the Indemnified Party) and shall not be liable to
such Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that, if Niagara Bancorp elects not to assume such
defense or counsel for the Indemnified Parties advises that there are issues
which raise conflicts of interest between Niagara Bancorp and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
Niagara Bancorp shall pay all reasonable fees and expenses of such counsel for
the Indemnified Parties promptly as statements therefor are received, provided
further that Niagara Bancorp shall in all cases be obligated pursuant to this
paragraph to pay for only one firm of counsel for all Indemnified Parties, (2)
the Indemnified Parties will cooperate in the defense of any such Claim and (3)
Niagara Bancorp shall not be liable for any settlement effected without its
prior written consent (which consent shall not unreasonably be withheld).
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(d) In the event Niagara Bancorp or any of is successors or assigns (1)
consolidates with or merges into any other Person and shall not continue or
survive such consolidation or merger, or (2) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Niagara Bancorp assume the obligations set forth in
this Section 5.05.
(e) The provisions of this Section 5.05 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
Section 5.06. No Other Bids and Related Matters. From and after the
date hereof until the termination of this Agreement, neither ABC, Albion Federal
or any ABC Subsidiary, nor any of their respective officers, directors,
employees, representatives, agents or affiliates (including, without limitation,
any investment banker, attorney or accountant retained by ABC or any of its
Subsidiaries), will, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or facilitate knowingly, 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 or entity 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 ABC shall notify Niagara Bancorp orally (within one
business day) and in writing (as promptly as practicable) of all of the relevant
details relating to all inquiries and proposals which it or any of its
Subsidiaries or any such officer, director employee, investment banker,
financial advisor, attorney, accountant or other representative may receive
relating to any of such matters and of such inquiry or proposal promptly,
provided, however, that nothing contained in this Section 5.06 shall prohibit
the Board of Directors of ABC from (i) furnishing information to, or entering
into discussions or negotiations with any person or entity that makes an
unsolicited written, bona fide proposal, to acquire ABC or Albion Federal
pursuant to a merger, consolidation, share exchange, business combination,
tender or exchange offer or other similar transaction, if, and only to the
extent that, (A) the Board of Directors of ABC, after consultation with and
based upon the advice of independent legal counsel, determines in good faith
that such action is necessary for the Board of Directors of ABC to comply with
its fiduciary duties to stockholders under applicable law (such proposal that
satisfies (A) is referred to herein as a "Superior Proposal") and (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, ABC provides reasonable notice to Niagara Bancorp
to the effect that it is furnishing information to, or entering into discussions
or negotiations with, such person or entity, (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer or
(iii) failing to make or withdrawing or modifying its recommendation and
entering into a Superior Proposal if there exists a Superior Proposal and the
Board of Directors of ABC, after consultation with and based upon the advice of
independent legal counsel, determined in good faith that such action is
necessary for such Board of Directors to comply with its fiduciary duties to
stockholders under applicable law. For purposes of this Agreement, "Acquisition
Proposal" shall mean any of the following (other than the transactions
contemplated
35
hereunder) involving ABC 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 20% or more of the assets of ABC or Albion Federal, taken
as a whole, in a single transaction or series of transactions; (iii) any tender
offer or exchange offer for 20% or more of the outstanding shares of capital
stock of ABC 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.
Section 5.07. Duty to Advise; Duty to Update ABC's Disclosure
Schedules. ABC shall promptly advise Niagara Bancorp of any change or event
having a Material Adverse Effect on it or on any ABC Subsidiary or which it
believes would or would be reasonably likely to cause or constitute a material
breach of any of its representations, warranties or covenants set forth herein.
ABC shall update ABC's DISCLOSURE SCHEDULES as promptly as practicable after the
occurrence of an event or fact which, if such event or fact had occurred prior
to the date of this Agreement, would have been disclosed in the ABC DISCLOSURE
SCHEDULES. The delivery of such updated Schedule shall not relieve ABC from any
breach or violation of this Agreement and shall not have any effect for the
purposes of determining the satisfaction of the condition set forth in Sections
6.02(c) hereof.
Section 5.08. Conduct of Niagara Bancorp's Business. From the date of
this Agreement to the Closing Date, Niagara Bancorp will use its best efforts to
(x) preserve its business organizations intact, (y) maintain good relationships
with employees, and (z) preserve for itself the goodwill of customers of
Lockport Savings. From the date of this Agreement to the Closing Date, neither
Niagara Bancorp nor Lockport Savings will (i) amend its certificate of
incorporation, charter or bylaws in any manner inconsistent with the prompt and
timely consummation of the transactions contemplated by this Agreement; (ii)
take any action which would result in any of the representations and warranties
of Niagara Bancorp or Lockport Savings 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 VI hereof not being satisfied, except in each case as may be
required by applicable law; (iii) take any action which would or is reasonably
likely to adversely effect or materially delay the receipt of the necessary
approvals from the Regulatory Authorities; (iv) take action which would or is
reasonably likely to materially and adversely affect Niagara Bancorp's ability
to perform its covenants and agreements under this Agreement; (v) take any
action that would result in any of the conditions to the Company Merger not
being satisfied; or (vi) agree to do any of the foregoing.
Section 5.09. Board and Committee Minutes. ABC and Albion Federal shall
each provide to Niagara Bancorp, within thirty (30) days after any meeting of
their respective Board of Directors, or any committee thereof, or any senior
management committee, a copy of the minutes of such meeting, except that with
respect to any meeting held within thirty (30) days of the Closing Date, such
minutes shall be provided to each party prior to the Closing Date.
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Section 5.10. Undertakings by ABC and Niagara Bancorp.
(a) From and after the date of this Agreement:
(i) Voting by Directors. As promptly as practicable following
execution of this Agreement, ABC's Directors shall each enter into the agreement
set forth as Exhibit B to this
Agreement;
(ii) Proxy Solicitor. ABC shall retain a proxy solicitor in
connection with the solicitation of shareholder approval of this Agreement;
(iii) Timely Review. If requested by Niagara Bancorp at
Niagara Bancorp's sole expense, ABC shall cause its independent certified public
accountants to perform a review of its unaudited consolidated financial
statements as of the end of any calendar quarter, in accordance with Statement
of Auditing Standards No. 36, and to issue their report on such financial
statements as soon as is practicable thereafter;
(iv) Outside Service Bureau Contracts. If requested to do so
by Niagara Bancorp, ABC shall use its best efforts to obtain an extension of any
contract with an outside service bureau or other vendor of services to ABC, on
terms and conditions mutually acceptable to ABC and
Niagara Bancorp;
(v) Board Meetings. ABC and Albion Federal shall permit a
representative of Niagara Bancorp to attend any meeting of ABC and/or Albion
Federal's Board of Directors or the Executive Committees thereof (provided that
neither ABC nor Albion Federal shall be required to permit the Niagara Bancorp
representative to remain present during any confidential discussion of the
Agreement and the transactions contemplated thereby).
(vi) List of Nonperforming Assets. ABC shall provide Niagara
Bancorp, within ten (10) 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; and
(vii) Reserves and Merger-Related Costs. On or before the
Effective Date, and at the request of Niagara Bancorp, ABC shall establish such
additional accruals and reserves as may be necessary to conform the accounting
reserve practices and methods (including credit loss practices and methods) of
ABC to those of Niagara Bancorp (as such practices and methods are to be applied
to ABC from and after the Closing Date) and Niagara Bancorp's plans with respect
to the conduct of the business of ABC following the Merger and otherwise to
reflect Merger-related expenses and costs incurred by ABC, provided, however,
that ABC shall not be required to take such
37
action unless Niagara Bancorp agrees in writing that all conditions to closing
set forth in Section 6.02 have been satisfied or waived (except for the
expiration of any applicable waiting periods); prior to the delivery by Niagara
Bancorp of the writing referred to in the preceding clause, ABC shall provide
Niagara Bancorp a written statement, certified without personal liability by the
chief executive officer of ABC and dated the date of such writing, that the
representation made in Section 3.15 hereof is true as of such date or,
alternatively, setting forth in detail the circumstances that prevent such
representation from being true as of such date; and no accrual or reserve made
by ABC or any ABC Subsidiary pursuant to this subsection, or any litigation or
regulatory proceeding arising out of any such accrual or reserve, shall
constitute or be deemed to be a breach or violation of any representation,
warranty, covenant, condition or other provision of this Agreement or to
constitute a termination event within the meaning of Section 7.01(b) hereof. No
action shall be required to be taken by ABC pursuant to this Section 5.10(vii)
if, in the opinion of ABC's independent auditors, such action would contravene
GAAP.
(viii) Shareholders Meeting. ABC shall submit this Agreement
to its shareholders for approval at a meeting to be held as soon as practicable,
and, subject to the next sentence, its Boards of Director shall recommend
approval of this Agreement to the ABC shareholders. The Board of Directors of
ABC may fail to make such a recommendation, or withdraw, modify or change any
such recommendation only in connection with a Superior Proposal, as set forth in
Section 5.06 of this Agreement, and only if such Board of Directors, after
having consulted with and considered the written advice of outside counsel to
such Board, 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 Delaware law. ABC shall
take all steps necessary in order to hold a special meeting of stockholders for
the purpose of approving this Agreement within four months of the date of this
Agreement, or as soon thereafter as is practicable. ABC shall promptly inform
Niagara Bancorp of any shareholder who makes a written demand upon ABC for an
appraisal of his shares of ABC Common Stock in connection with the Company
Merger.
(b) From and after the date of this Agreement, Niagara Bancorp and ABC
shall each:
(i) Filings and Approvals. Cooperate with the other in the
preparation and filing, as soon as practicable, of (A) the Applications, (B) the
Proxy Statement, (C) all other documents necessary to obtain any other approvals
and consents required to effect the completion of the Merger, and the
transactions contemplated by this Agreement, (D) all other documents
contemplated by this Agreement;
(ii) Public Announcements. Cooperate and cause their
respective officers, directors, employees and agents to cooperate in good faith,
consistent with their respective legal obligations, in the preparation and
distribution of, and agree upon the form and substance of, any press release
related to this Agreement and the transactions contemplated hereby, and any
other public disclosures related thereto, including without limitation
communications to shareholders, internal announcements and customer disclosures,
but nothing contained herein shall prohibit either
38
party from making any disclosure which its counsel deems necessary, provided
that the disclosing party notifies the other party reasonably in advance of the
timing and contents of such disclosure;
(iv) Maintenance of Insurance. Maintain, and cause their
respective 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;
(v) Maintenance of Books and Records. Maintain, and cause
their respective Subsidiaries to maintain, books of account and records in
accordance with GAAP applied on a basis consistent with those principles used in
preparing the financial statements heretofore delivered;
(vi) Delivery of Securities Documents. Deliver to the other,
copies of all Securities Documents simultaneously with the filing thereof; and
(vii) Taxes. File all federal, state, and local tax returns
required to be filed by them or their respective Subsidiaries on or before the
date such returns are due (including any extensions) and pay all taxes shown to
be due on such returns on or before the date such payment is due.
(c) For planning purposes, ABC shall, within 30 days from the date
hereof, provide Niagara Bancorp with its estimated budget of transaction-related
expenses reasonably anticipated to be payable by ABC in connection with its
transaction based on facts and circumstances currently known, including the fee
and expenses of counsel, accountants, investment bankers and other
professionals. ABC shall promptly notify ABC if or when it determines that it
will expect to exceed its budget; provided, however, that it is understood that
ABC exceeding such budget, in and of itself, shall not constitute a breach of
this Agreement. ABC has previously disclosed to Niagara Bancorp the method by
which the fees of its investment bankers and counsel in connection with this
transaction are to be determined. Promptly, but in any event within 30 days,
after the execution of this Agreement, ABC shall ask all of its attorneys and
other professionals to render current and correct invoices for all unbilled time
and disbursements. ABC shall accrue and/or pay all of such amounts as soon as
possible. ABC shall request that its professionals render monthly invoices
within 30 days after the end of each month. ABC shall notify Niagara Bancorp
monthly of all out-of-pocket expenses which ABC has incurred in connection with
this Agreement.
Section 5.11. Employee and Termination Benefits; Directors and
Management.
(a) Employee Benefits. Except as otherwise provided in Section 5.11(d)
of this Agreement, as of or after the Merger Effective Date, and at Niagara
Bancorp's election and subject to the requirements of the IRC, the ABC Employee
Plans may continue to be maintained separately, or consolidated, or terminated.
In the event of a consolidation of any or all of such plans or in the event of
termination of any ABC Employee Plan, ABC employees who continue employment with
Niagara Bancorp or any Niagara Bancorp Subsidiary ("Continuing Employees") shall
receive credit for service with ABC (for purposes of eligibility and vesting
determination but not for benefit
39
accrual purposes) under any existing Niagara Bancorp benefit plan, or new
Niagara Bancorp benefit plan in which such employees would be eligible to
enroll. In the event of any termination or consolidation of any ABC health plan
with any Niagara Bancorp health plan, Niagara Bancorp and/or Lockport Savings
shall make available to Continuing Employees employer-provided health coverage
on the same basis as it provides such coverage to Niagara Bancorp or Lockport
Savings employees. In the event of any termination of or consolidation of any
ABC health plan with any Niagara Bancorp health plan, all Continuing Employees
who were covered under the terminated or consolidated plan shall have immediate
coverage of any pre-existing condition. In the event of a termination or
consolidation of any ABC health plan, terminated ABC employees and qualified
beneficiaries will have the right to continue coverage under group health plans
of Niagara Bancorp and/or Niagara Bancorp subsidiaries in accordance with IRC
Section 4980B(f).
(b) After the Merger Effective Date, any former employees of ABC or any
ABC Subsidiary whose employment is terminated, other than for cause, shall be
provided with severance benefits in accordance with ABC's severance policy, as
described on ABC DISCLOSURE SCHEDULE 5.11(b), payable within seven days of
termination. Terminated employees of Albion Federal who are qualified for
positions available at Lockport Savings will be given preference in terms of
applying for such positions.
(c) Niagara Bancorp shall establish an Albion Federal Advisory Board of
Directors to consist of those persons who currently serve on the ABC Board, and
such persons shall commence service on the Advisory Board of Directors
immediately following the Merger Effective Date. The Advisory Board shall be
maintained for at least two years following the Merger Effective Date. James H.
Keeler shall serve as Chairman of the Advisory Board. The Advisory Board shall
meet no less than quarterly and each board member shall receive a per meeting
fee of $250.
(d) The ABC Employee Stock Ownership Plan (the "ABC ESOP") shall be
terminated as of, or prior to, the Merger Effective Date (all shares held by the
ESOP shall be converted into the right to receive the Merger Consideration), all
outstanding ABC ESOP indebtedness shall be repaid, and the balance shall be
allocated and distributed to ABC employees (subject to the receipt of a
determination letter from the IRS), as provided for in the ABC ESOP and unless
otherwise required by applicable law.
(e) Niagara Bancorp shall honor the employment agreement set forth in
ABC DISCLOSURE SCHEDULE 3.08(a) and shall make the payment required thereunder
as set forth in ABC DISCLOSURE SCHEDULE 5.11(e), payable within fourteen days of
termination.
Section 5.12. Duty to Advise; Duty to Update Niagara Bancorp's
Disclosure Schedules. Niagara Bancorp shall promptly advise ABC of any change or
event having a Material Adverse Effect on it or on any Niagara Bancorp
Subsidiary or which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants set forth herein. Niagara Bancorp shall update Niagara Bancorp's
DISCLOSURE SCHEDULES as promptly as practicable after the occurrence of an event
or fact which, if such event or fact had
40
occurred prior to the date of this Agreement, would have been disclosed in the
Niagara Bancorp DISCLOSURE SCHEDULE. The delivery of such updated Schedules
shall not relieve Niagara Bancorp from any breach or violation of this Agreement
and shall not have any effect for the purposes of determining the satisfaction
of the condition set forth in Sections 6.01(c) hereof.
Section 5.13. Bank and Related Merger Transactions.
(a) As soon as practicable following the Merger Effective Date, Niagara
Bancorp shall, and it shall cause ABC (as the Surviving Corporation in the
Company Merger) to, effect a merger of ABC, as the surviving company in the
merger of ABC and Niagara Merger Subsidiary, into Niagara Bancorp, with Niagara
Bancorp being the surviving corporation (the "Subsequent Merger") by executing a
merger agreement and filing a certificate of merger with the Delaware Office of
the Secretary of State pursuant to the DGCL. The Subsequent Merger shall become
effective at the time (the "Subsequent Effective Time") specified in the
certificate of merger filed with the Delaware Office of the Secretary of State
pursuant to the DGCL. As a result of the Subsequent Merger, the separate
corporate existence of ABC shall cease and Niagara Bancorp shall be the
surviving corporation and continue its corporate existence under the laws of the
State of Delaware.
(b) As soon as practicable after consummation of the Subsequent Merger,
Niagara Bancorp and ABC shall take all actions necessary and appropriate,
including causing the entering into of an appropriate merger agreement in the
form attached to this Agreement as Exhibit A (the "Bank Merger Agreement"), to
cause Albion Federal to merge with and into Lockport Savings, with Lockport
Savings as the surviving institution, as Niagara Bancorp deems advisable, in
each case in accordance with applicable laws and regulations and the terms of
the applicable Bank Merger Agreement.
ARTICLE VI
CONDITIONS
Section 6.01. Conditions to ABC's Obligations under this Agreement. The
obligations of ABC hereunder shall be subject to satisfaction at or prior to the
Closing Date of each of the following conditions, unless waived by ABC pursuant
to Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, Niagara Bancorp and Niagara Merger Subsidiary to authorize the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated by this Agreement, shall have been duly and
validly taken by Niagara Bancorp and Niagara Merger Subsidiary; and ABC shall
have received certified copies of the resolutions evidencing such
authorizations;
(b) Covenants. The obligations and covenants of Niagara Bancorp and
Niagara Merger Subsidiary required by this Agreement to be performed by Niagara
Bancorp and Niagara Merger
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Subsidiary at or prior to the Closing Date shall have been duly performed and
complied with in all material respects;
(c) Representations and Warranties. Each of the representations and
warranties of Niagara Bancorp and Niagara Merger Subsidiary set forth in this
Agreement shall be true and correct in all material respects, in each case as of
the date of this Agreement, and as of the Closing Date as though made on and as
of the Closing Date (except as to any representation or warranty which
specifically relates to an earlier date); provided, however, that in
interpreting Sections 6.01(c) and 7.01(b)(i) of this Agreement, no
representation or warranty of Niagara Bancorp or Niagara Merger Subsidiary shall
be deemed untrue or incorrect, and neither Niagara Bancorp nor Niagara Merger
Subsidiary shall be deemed to have breached a representation or warranty, as a
consequence of any fact, event or circumstances unless such fact, event or
circumstance, individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty of Niagara
Bancorp or Niagara Merger Subsidiary contained in this Agreement has had or is
reasonably likely to have a Material Adverse Effect on Niagara Bancorp and
Lockport Savings, taken as a whole, from that disclosed by Niagara Bancorp on
the date of this Agreement.
(d) Approvals of Regulatory Authorities. Niagara Bancorp shall have
received all required approvals of Regulatory Authorities of the Merger; and all
notice and waiting periods required thereunder shall have expired or been
terminated;
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) Officer's Certificate. Niagara Bancorp shall have delivered to ABC
a certificate, dated the Closing Date and signed, without personal liability, by
its chairman of the board or president, to the effect that the conditions set
forth in subsections (a) through (f) and (i) of this Section 6.01 have been
satisfied, to the best knowledge of the officer executing the same;
(g) Opinion of Niagara Bancorp's Counsel. ABC shall have received an
opinion of Luse Lehman Gorman Pomerenk & Schick, P.C., counsel to Niagara
Bancorp, dated the Closing Date, in form and substance reasonably satisfactory
to ABC and its counsel to the effect set forth on Exhibit 6.1 attached hereto;
and
(h) Approval of ABC's Shareholders. This Agreement shall have been
approved by the shareholders of ABC by such vote as is required under applicable
Delaware law, ABC's certificate of incorporation and bylaws, and under Nasdaq
requirements applicable to it.
(i) Funds Deposited with the Exchange Agent. Niagara Bancorp shall have
deposited or caused to be deposited, in trust with the Exchange Agent, an amount
of cash equal to the aggregate Merger Consideration that the ABC stockholders
shall be entitled to receive on the Merger Effective Date pursuant to Section
2.02 of this Agreement.
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Section 6.02. Conditions to Niagara Bancorp's Obligations under this
Agreement. The obligations of Niagara Bancorp hereunder shall be subject to
satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by Niagara Bancorp pursuant to Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on the
part of, ABC to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated by this
Agreement, shall have been duly and validly taken by ABC; and Niagara Bancorp
shall have received certified copies of the resolutions evidencing such
authorizations;
(b) Covenants. The obligations and covenants of ABC and each ABC Subsidiary
required by this Agreement to be performed at or prior to the Closing Date shall
have been duly performed and complied with in all material respects;
(c) Representations and Warranties. Each of the representations and
warranties of ABC and each ABC Subsidiary set forth in this Agreement shall be
true and correct in all material respects, in each case as of the date of this
Agreement, and as of the Closing Date as though made on and as of the Closing
Date (except as to any representation or warranty which specifically relates to
an earlier date); provided, however, that in interpreting Sections 6.02(c) and
7.01(b)(i) of this Agreement, no representation or warranty of ABC or any ABC
Subsidiary shall be deemed untrue or incorrect, and neither ABC nor any ABC
Subsidiary shall be deemed to have breached a representation or warranty, as a
consequence of any fact, event or circumstances unless such fact, event or
circumstances, individually or taken together with all other facts, events or
circumstances inconsistent with any representation or warranty of ABC or any ABC
Subsidiary contained in this Agreement has had or is reasonably likely to have a
Material Adverse Effect on ABC and Albion Federal, taken as a whole, from that
disclosed by ABC on the date of this Agreement.
(d) Approvals of Regulatory Authorities. Niagara Bancorp shall have
received all required approvals of Regulatory Authorities of the Merger (without
the imposition of any conditions that are in Niagara Bancorp's reasonable
judgement unduly burdensome, excluding standard conditions that are normally
imposed by the Regulatory Authorities in bank merger transactions); and all
notice and waiting periods required thereunder shall have expired or been
terminated;
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) No Material Adverse Effect. Since December 31, 1998, there shall not
have occurred any Material Adverse Effect with respect to ABC;
43
(g) Officer's Certificate. ABC shall have delivered to Niagara Bancorp
a certificate, dated the Closing Date and signed, without personal liability, by
its chairman of the board or president, to the effect that the conditions set
forth in subsections (a) through (f) of this Section 6.02 have been
satisfied, to the best knowledge of the officer executing the same;
(h) Opinions of ABC's Counsel. Niagara Bancorp shall have received an
opinion of Breyer & Associates PC, counsel to ABC, dated the Closing Date, in
form and substance reasonably satisfactory to Niagara Bancorp and its counsel to
the effect set forth on Exhibit 6.3 attached hereto; and
(i) Tax Opinion. Niagara Bancorp shall have received an opinion of Luse
Lehman Gorman Pomerenk & Schick, P.C., its counsel, substantially to the effect
set forth on Exhibit 6.2 attached hereto.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination. This Agreement may be terminated on or at any
time prior to the Closing Date:
(a) By the mutual written consent of the parties hereto;
(b) By either Niagara Bancorp or ABC acting individually:
(i) if there shall have been a material breach of any
representation, warranty, covenant or other obligation of the other party
(subject to the standard set forth in Sections 6.01(c) and 6.02(c)), and the
breach cannot be, or shall not have been, remedied within 30 days after receipt
by such other party of notice in writing specifying the nature of such breach
and requesting that it be remedied;
(ii) if the Closing Date shall not have occurred on or before
May 31, 2000, unless the failure of such occurrence shall be due to the failure
of the party seeking to terminate this Agreement to perform or observe its
obligations set forth in this Agreement required to be performed
or observed by such party on or before the Closing Date;
(iii) if either party has been informed in writing by a
Regulatory Authority whose approval or consent has been requested that such
approval or consent is unlikely to be granted, unless the failure of such
occurrence shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe its agreements set forth herein required to be
performed or observed by such party on or before the Closing Date;
44
(iv) if the approval of the shareholders of ABC required for
the consummation of the Merger shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of shareholders or at
any adjournment or postponement thereof; or
(c) By Niagara Bancorp if (i) as provided in Section 5.10(a)(viii), the
Board of Directors of ABC withdraws its recommendation of this Agreement, fails
to make such recommendation or modifies or qualifies its recommendation in a
manner adverse to Niagara Bancorp, or (ii) in reliance on Section 5.06 of this
Agreement, ABC (or Albion Federal) enters into an agreement to be acquired by,
or merge or combine with, a third party in connection with a Superior Proposal.
Section 7.02. Effect of Termination. (a) Except as otherwise provided
in this Agreement, if this Agreement is terminated pursuant to Section 7.01
hereof, this Agreement shall forthwith become void (other than Section 5.02(d)
and Section 8.01 hereof, which shall remain in full force and effect), and there
shall be no further liability on the part of Niagara Bancorp or ABC to the
other, except that no party shall be relieved or released from any liabilities
or damages arising out of its willful breach of any provision of this Agreement.
(b) As a condition of Niagara Bancorp's willingness, and in order to
induce Niagara Bancorp to enter into this Agreement and to reimburse Niagara
Bancorp for incurring the costs and expenses related to entering into this
Agreement and consummating the transactions contemplated by this Agreement, ABC
will make a cash payment to Niagara Bancorp of $619,000 (the "Expense Fee"), if
Niagara Bancorp has terminated this Agreement pursuant to Section 7.01(c). Any
payment required under this Section 7.02(b) shall be paid by ABC to Niagara
Bancorp (by wire transfer of immediately available funds to an account
designated by Niagara Bancorp) within five business days after written demand by
Niagara Bancorp.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Expenses. (a) Except as provided herein, each party
hereto shall bear and pay all costs and expenses incurred by it in connection
with the transactions contemplated hereby, including fees and expenses of its
own financial consultants, accountants and counsel; provided, however, that the
parties shall mutually agree upon the printing of the Proxy Statement, which
printing expense shall be borne equally by the parties hereto.
(b) In the event of any termination of this Agreement pursuant to
Section 7.01(b)(i) hereof because of a breach of this Agreement by one of the
parties, and in addition to any other damages and remedies that may be available
to the non-breaching party, the non-breaching party shall be entitled to payment
of, and the breaching party shall pay to the non-breaching party, all
out-of-pocket costs and expenses, including, without limitation, reasonable
legal, accounting and investment banking fees and expenses, incurred by the
non-breaching party in connection with entering into this Agreement and carrying
out of any and all acts contemplated hereunder; provided,
45
however, that this clause shall not be construed to relieve or release a
breaching party from any additional liabilities or damages arising out of its
willful breach of any provision of this Agreement.
Section 8.02. Non-Survival of Representations and Warranties. All
representations, warranties and, except to the extent specifically provided
otherwise herein, agreements and covenants, other than those covenants set forth
in Sections 5.05 and 5.11(a), (b) and (c), (d) and (e), which will survive the
Merger, shall terminate on the Closing Date.
Section 8.03. Amendment, Extension and Waiver. Subject to applicable
law, at any time prior to the consummation of the transactions contemplated by
this Agreement, the parties may (a) amend this Agreement, (b) extend the time
for the performance of any of the obligations or other acts of either 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 in Articles V and
VI hereof or otherwise. This Agreement may not be amended except by an
instrument in writing authorized by the respective Boards of Directors and
signed, by duly authorized officers, on behalf 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 by a duly authorized
officer 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.
Section 8.04. Entire Agreement. This Agreement, including the documents
and other writings referred to herein or delivered pursuant hereto, contains the
entire agreement and understanding of the parties with respect to its subject
matter. This Agreement supersedes all prior arrangements and understandings
between the parties, both written or oral with respect to its subject matter.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors; provided, however, that nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto and their respective successors, any rights, remedies,
obligations or liabilities other than pursuant to Sections 2.02(a)(i), 2.03 and
5.05.
Section 8.05. No Assignment. Neither party hereto may assign any of its
rights or obligations hereunder to any other person, without the prior written
consent of the other party hereto.
Section 8.06. Notices. All notices or other communications hereunder shall
be in writing and shall be deemed given if delivered personally, mailed by
prepaid registered or certified mail (return receipt requested), or sent by
telecopy, addressed as follows:
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(a) If to Niagara Bancorp, Inc. to:
Niagara Bancorp
6950 South Transit Road
P.O. Box 514
Lockport, New York 14095-0514
Attention: William E. Swan
President and Chief Executive Officer
with a copy to: Luse Lehman Gorman Pomerenk & Schick, PC
5335 Wisconsin Avenue, NW
Washington, D.C. 20015
Attention: John J. Gorman, Esq.
Eric Luse, Esq.
(b) If to ABC, to:
Albion Banc Corp.
48 North Main Street
Albion, New York 14411
Attn: James H. Keeler
Chairman of the Board of Directors
with a copy to:
Breyer & Associates PC
1100 New York Avenue, N.W.
Suite 700 East
Washington, DC 20005
Attn: John F. Breyer, Jr., Esq.
Section 8.07. Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
Section 8.08. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
Section 8.09. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
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Section 8.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic internal law (including the law of
conflicts of law) of the State of Delaware.
Section 8.11. 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 to prevent breaches of this Agreement and to
enforce specifically the terms and provisions thereof 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.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
NIAGARA BANCORP, INC.
By: /s/ William E. Swan
--------------------------------------
William E. Swan
President and Chief Executive Officer
NIAGARA MERGER SUBSIDIARY, INC.
By: /s/ William E. Swan
--------------------------------------
William E. Swan
President and Chief Executive Officer
LOCKPORT SAVINGS BANK
By: /s/ William E. Swan
--------------------------------------
William E. Swan
President and Chief Executive Officer
ALBION BANC CORP.
By: /s/ James H. Keeler
--------------------------------------
James H. Keeler
Chairman of the Board of Directors
ALBION FEDERAL SAVINGS AND LOAN
ASSOCIATION
By: /s/ James H. Keeler
--------------------------------------
James H. Keeler
Chairman of the Board of Directors
49