Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e) (2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Ambanc Holding Co., Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies: Common
Stock
(2) Aggregate number of securities to which transaction applies: 4,436,178
shares and 608,348 options
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):Each of the
4,436,178 issued and outstanding shares of Common Stock will, upon
consummation of the merger, be converted into the right to receive
$21.50 in cash. In exchange for the cancellation of the 603,348
options to purchase Registrant's common stock, holders thereof will
receive, in the aggregate, $3,769,830 in cash.
(4) Proposed maximum aggregate value of transaction: $100,760,157.
(5) Total fee paid: $20,152.03.
/x/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:_________________________________
(2) Form, schedule or registration statement no.:___________
(3) Filing party:___________________________________________
(4) Date filed:_____________________________________________
[Ambanc Holding Co., Inc. letterhead]
November 2, 2001
Dear Fellow Stockholder:
We cordially invite you to attend a special meeting of the stockholders
of Ambanc Holding Co., Inc. The meeting will be held at our main office located
at 11 Division Street, Amsterdam, New York, on Monday, December 10, 2001 at 1:00
p.m., Eastern Time.
At the special meeting, you will be asked to adopt a merger agreement
which provides for the merger of Ambanc Holding Co., Inc. into a subsidiary of
Hudson River Bank & Trust Company. If the merger is completed, you will be
entitled to receive a cash payment of $21.50 for each share of Ambanc stock that
you own. Upon completion of the merger, you will not own any stock or other
interest in Ambanc Holding Co., Inc. nor will you receive, as a result of the
merger, any stock of Hudson River Bank & Trust Company or its parent holding
company, Hudson River Bancorp, Inc.
Your exchange of shares of Ambanc stock for cash generally will cause
you to recognize taxable gain or loss for federal, and possibly state and local,
income tax purposes. You should consult your personal tax advisor for a full
understanding of the tax consequences of the merger applicable to you.
Completion of the merger is subject to certain conditions, including
receipt of various regulatory approvals and adoption of the merger agreement by
the affirmative vote of a majority of our outstanding shares of common stock. As
of October 23, 2001, the directors and executive officers of Ambanc Holding Co.,
Inc. beneficially owned 21.7% of the shares of Ambanc stock. We expect that all
of the shares held by our directors and executive officers will be voted in
favor of the merger.
We urge you to read the attached proxy statement carefully. It
describes the merger agreement in detail and includes a copy of the merger
agreement as Appendix A.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND RECOMMENDS THAT YOU VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT BECAUSE THE
BOARD BELIEVES IT TO BE IN THE BEST INTERESTS OF OUR STOCKHOLDERS.
It is very important that your shares be represented at the special
meeting. Whether or not you plan to attend the special meeting, please complete,
date and sign the enclosed proxy form and return it promptly in the postage-paid
envelope provided.
On behalf of the Board of Directors, I thank you for your prompt
attention to this important matter.
Sincerely,
/s/John M. Lisicki
-------------------------------------
John M. Lisicki
President and Chief Executive Officer
THE ATTACHED PROXY STATEMENT AND ENCLOSED PROXY FORM ARE FIRST BEING MAILED TO
STOCKHOLDERS ON OR ABOUT NOVEMBER 2, 2001
Ambanc Holding Co., Inc.
11 Division Street
Amsterdam, New York 12010-4303
(518) 842-7200
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 10, 2001
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Ambanc
Holding Co., Inc. will be held at our main office located at 11 Division Street,
Amsterdam, New York on December 10, 2001 commencing at 1:00 p.m., Eastern Time.
A proxy form and a proxy statement for the special meeting are enclosed. The
meeting is for the purpose of considering and acting upon:
1. The adoption of the Agreement and Plan of Merger, dated September 4,
2001, between Hudson River Bank & Trust Company and Ambanc Holding Co.,Inc.
Pursuant to the terms of the merger agreement, we will be merged with a wholly
owned subsidiary of Hudson River Bank & Trust Company and ultimately will be
merged with Hudson River Bank & Trust Company. You will be entitled to receive
$21.50 in cash for each share of Ambanc common stock that you own. A copy of the
merger agreement is included as Appendix A to the accompanying proxy statement;
2. Such other matters as may properly come before the special meeting
or any adjournments or postponements thereof.
As of the date of this notice, we are not aware of any business to be
acted upon at the special meeting other than the proposal to adopt the merger
agreement. If such other matters are properly brought before the special meeting
or any adjournment or postponement of the special meeting, our board of
directors will have the discretion to vote or act on such matters according to
their best judgment.
Our stockholders of record at the close of business on October 23, 2001
are entitled to vote at the special meeting, and any adjournments or
postponements of the special meeting. You have a right to dissent from the
merger and obtain payment of the fair value of your shares by complying with the
Delaware law provisions contained in Appendix C.
You are cordially invited to attend the special meeting. However, to
ensure your representation at the special meeting, please complete, sign, date
and promptly mail your proxy form in the enclosed postage-paid envelope. The
proxy form will not be used if you attend and vote at the special meeting in
person. If you are a stockholder whose shares are not registered in your name,
you will need additional documentation from the holder of record of your shares
to vote in person at the meeting. The prompt return of your proxy will save us
the expense of further requests for proxies.
By Order of the Board of Directors,
/s/Robert Kelly
-----------------------------------
Robert Kelly
Secretary
Amsterdam, New York
November 2, 2001
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT YOU VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT.
TABLE OF CONTENTS
Page
----
Questions and Answers About Voting Procedures for the Special Meeting....................................... 1
Summary Term Sheet.......................................................................................... 2
Information About Ambanc.................................................................................... 5
Where You Can Find More Information......................................................................... 5
The Special Meeting......................................................................................... 5
Place, Time and Date............................................................................... 5
Matters to Be Considered .......................................................................... 5
Record Date; Vote Required......................................................................... 6
Beneficial Ownership of Ambanc Common Stock........................................................ 6
Ambanc Common Stock................................................................................ 6
Proxies............................................................................................ 7
The Merger.................................................................................................. 8
General............................................................................................ 8
The Companies...................................................................................... 8
Background of the Merger........................................................................... 9
Our Reasons for the Merger; Recommendation of Your Board of Directors.............................. 12
The Consideration is Fair According to FinPro, Inc., Our Financial Advisor......................... 13
Net Asset Value.................................................................................... 16
Market Value....................................................................................... 16
Analysis - Transaction Value....................................................................... 16
Select Merger Multiples............................................................................ 16
Investment Value................................................................................... 17
Net Present Value of Dividends Stream and Terminal Value........................................... 18
Prior Relationships................................................................................ 18
Compensation for Services Rendered................................................................. 18
You Will Receive Cash for Your Shares of Ambanc Stock.............................................. 18
Treatment of Options and Restricted Shares......................................................... 19
Procedure for Surrendering Your Certificates....................................................... 19
Representations and Warranties Made by Us and Hudson River Bank & Trust Company.................... 20
Conditions to the Merger........................................................................... 21
Conduct of Business Prior to the Completion of the Merger.......................................... 22
Approvals Needed to Complete the Merger............................................................ 25
Waiver and Amendment of the Merger Agreement; Alternative Structure................................ 26
Termination of the Merger Agreement................................................................ 26
Interests of Directors and Officers in the Merger that are Different from Your Interests........... 28
Employees and Benefit Plans........................................................................ 29
Dissenters' Rights of Appraisal.................................................................... 30
Federal Income Tax Consequences of the Merger to You............................................... 33
Accounting Treatment of the Merger................................................................. 33
Who Pays for What.................................................................................. 33
Certain Related Agreements.................................................................................. 34
Plan of Liquidation................................................................................ 34
Bank Merger Agreement.............................................................................. 34
Voting Agreement................................................................................... 34
Standstill Agreement................................................................................ 34
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Page
----
Beneficial Ownership of Ambanc Common Stock................................................................. 34
Stockholder Proposals....................................................................................... 37
Other Matters............................................................................................... 37
Appendix A -- Agreement and Plan of Merger (excluding the exhibits thereto)................................... A-1
Appendix B -- Opinion of Our Financial Advisor................................................................ B-1
Appendix C -- Section 262 of the Delaware General Corporation Law............................................. C-1
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QUESTIONS AND ANSWERS
ABOUT VOTING PROCEDURES OF THE SPECIAL MEETING
Q: What do I need to do now?
A: After you have carefully read this proxy statement, indicate on your proxy
form how you want your shares to be voted. Then sign, date and mail your
proxy form in the enclosed prepaid return envelope as soon as possible.
This will enable your shares to be represented and voted at the special
meeting.
Q: Why is my vote important?
A: The merger agreement must be adopted by a majority of the outstanding
shares of Ambanc common stock. If you do not return your proxy form or vote
in person at the special meeting, it will have the same effect as a vote
against the merger agreement.
Q: If my shares are held in street name by my broker, will my broker
automatically vote my shares for me?
A: No. Your broker will not be able to vote your shares without instructions
from you. You should instruct your broker to vote your shares, following
the directions your broker provides. If you fail to instruct your broker to
vote your shares, it will have the same effect as a vote against the merger
agreement.
Q: Can I attend the meeting and vote my shares in person?
A: Yes. All stockholders are invited to attend the special meeting.
Stockholders of record can vote in person at the special meeting. If your
shares are held in street name, then you are not the stockholder of record
and you must ask your broker or other nominee how you can vote at the
special meeting.
Q: Can I change my vote?
A: Yes. If you have not voted through your broker or other nominee, there are
three ways you can change your vote after you have sent in your proxy form.
* First, you may send a written notice to the person to whom you
submitted your proxy stating that you would like to revoke your proxy.
* Second, you may complete and submit a new proxy form. Any earlier
proxies will be revoked automatically.
* Third, you may attend the special meeting and vote in person. Any
earlier proxy will be revoked. However, simply attending the special
meeting without voting in person will not revoke your proxy.
If you have instructed a broker or other nominee to vote your shares, you
must follow directions you receive from your broker or other nominee to
change your vote.
Q: Should I send in my stock certificates now?
A: No. You should not send in your stock certificates at this time.
Instructions for surrendering your Ambanc stock certificates in exchange
for $21.50 per share in cash will be sent to you after we complete the
merger.
Q: Whom should I call with questions?
A: You should call our proxy solicitor, D.F. King & Co., Inc. at
1-800-829-6551.
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SUMMARY TERM SHEET
This summary term sheet highlights selected information from this proxy
statement. It does not contain all the information that may be important to you.
We urge you to read carefully the entire document and the other documents to
which we refer, including the merger agreement, to fully understand the merger.
You Will Be Entitled to Receive $21.50 in Cash Per Share of Ambanc Common Stock
(see pages 8 and 18).
When the merger is completed, each Ambanc stockholder will be entitled
to receive $21.50 in cash for each share of Ambanc common stock held. For
example, if you own 100 shares of Ambanc common stock, you will be entitled to
receive $2,150 upon the surrender of your certificate for those shares.
Our Reasons for the Merger (see pages 12-13).
Our Board of Directors believes that the merger is in the best
interests of Ambanc and Ambanc's stockholders and recommends that stockholders
vote "FOR" the adoption of the merger agreement. The merger will enable our
stockholders to realize significant value on their investment in Ambanc. In
reaching its decision to approve the merger agreement, our Board considered
various factors which are discussed in detail in this proxy statement.
Some Material Terms of the Merger
Agreement.
* As currently structured, Ambanc will first merge with a newly formed,
wholly- owned subsidiary of Hudson River Bank & Trust Company and will
become a subsidiary of Hudson River Bank & Trust Company; simultaneously
with the merger, Ambanc will be liquidated and dissolved by transferring
all of its assets and liabilities to Hudson River Bank & Trust Company (see
page 8).
* Mohawk Community Bank will subsequently merge with Hudson River Bank &
Trust Company with Hudson River Bank & Trust Company as the surviving bank
(see page 8).
* The merger cannot occur unless our stockholders adopt the merger agreement
by the affirmative vote of a majority of the outstanding shares of Ambanc
common stock and we receive approvals from banking regulators (see pages 21
and 25).
* If the merger is not completed on or before June 30, 2002, the merger may
be terminated by either Hudson River Bank & Trust Company or Ambanc, unless
the failure to close is due to a breach of the party seeking to terminate
(see pages 25 and 26).
* In connection with the merger, each of our directors and executive officers
entered into a voting agreement with Hudson River Bank & Trust Company.
Each of our directors and executive officers agreed, among other things, to
cause all of their shares of Ambanc common stock to be voted in favor of
the adoption of the merger agreement (see page 34).
* We have agreed not to solicit or encourage a competing transaction to
acquire us or Mohawk Community Bank, except where failure to do so would
cause our Board to breach its fiduciary duties (see page 24).
* We will pay Hudson River Bank & Trust Company a liquidated damages fee of
$3.0 million upon the occurrence of certain events (see pages 24 and 27).
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* We and Mohawk Community Bank have agreed to conduct our business according
to particular requirements (see pages 22- 24).
* The completion of the merger depends on a number of conditions being
satisfied or waived (see page 21).
The Merger Will Be Taxable to Our
Stockholders (see page 33).
Our stockholders will recognize gain or loss for federal, and possibly
state and local, income tax purposes, on the exchange of their Ambanc shares for
cash. Generally, you will recognize gain or loss equal to the difference between
the amount of cash you receive and your tax basis in your Ambanc shares. You
should determine the actual tax consequences of the merger applicable to you.
They will depend on your specific situation and factors not within our control.
You should consult your personal tax advisor for a full understanding of the
merger's specific tax consequences to you.
Our Board of Directors Recommends
Stockholder Approval (see pages 12-13).
Our Board of Directors believes that the merger is in the best
interests of Ambanc and its stockholders and has unanimously approved the merger
agreement. Our Board recommends that Ambanc stockholders vote "FOR" adoption of
the merger agreement.
Our Financial Advisor Says the Merger
Consideration is Fair from a Financial Point of
View to Our Stockholders (see pages 13-18).
Our financial advisor, FinPro, Inc., has given our Board of Directors a
written opinion dated September 4, 2001 and updated as of November 2, 2001 that
states the cash consideration to be paid to our stockholders is fair from a
financial point of view. The opinion does not address any other aspect of the
merger or any related transaction, nor does it constitute a recommendation to
any stockholder as to how to vote at the special meeting or any adjournment
thereof. A copy of the updated opinion is attached to this proxy statement as
Appendix B. You should read it completely to understand the assumptions made,
matters considered and limitations on the review performed by our financial
advisor in issuing its opinion. We have agreed to pay FinPro a fee equal to 1%
of the total merger consideration, which is estimated to amount to approximately
$1,000,000. Of this amount, $200,000 has been paid.
You have Dissenters' Rights (see pages 30-32).
Under Delaware law, you have dissenters' appraisal rights with respect
to your Ambanc shares. If you do not wish to accept the $21.50 per share cash
merger consideration, you can dissent from the merger and instead choose to have
the fair value of your shares judicially determined and paid to you in cash.
However, in order to exercise your rights, you must follow specific procedures.
You should carefully read Section 262 of the Delaware General Corporation Law
which is included as Appendix C.
The Merger Is Expected to Be Completed in
the First Quarter of Year 2002 (see page 21).
The merger will only occur after all the conditions to its completion
have been satisfied or waived. Currently, we anticipate that the merger will be
completed in the first quarter of 2002.
Financial Interests of Ambanc's Officers and Directors in the Merger (see pages
28-29).
Our directors and executive officers have interests in the merger as
individuals in addition to, or different from their interests as stockholders,
such as receiving severance payments, indemnification and insurance coverage,
and other benefits.
* In the event that the employment of Mr. Lisicki, Mr. Ziskin, Mr. Alescio
and Mr. Nachod, current officers of Ambanc, is terminated following the
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merger, such individuals will be eligible to receive severance payments.
(See page 29).
* Options to purchase our common stock held by directors, officers and
employees will be cancelled in exchange for a cash payment equal to the
difference between $21.50 and the option exercise price for each option
held at the merger effective date. Payments in exchange for such options
will be made for all options, even for such options not yet exercisable as
of the merger effective date.
* Restricted shares of our common stock granted to our directors, officers
and employees will be cancelled in exchange for a cash payment equal to
$21.50. Payment will be made for all restricted shares, even for such
shares not yet vested as of the merger effective date.
* Hudson River Bank & Trust Company has agreed to indemnify our and Mohawk
Community Bank's officers and directors for a six year period after the
merger for events that occurred before the merger, and to provide
directors' and officers' insurance coverage for a period of three years
after the merger.
* In connection with the merger, two current directors of Ambanc entered into
Standstill Agreements with Hudson River Bank & Trust Company whereby such
persons agreed, for a stated period of time, not to acquire a certain
amount of voting shares of Hudson River Bancorp, Inc., the parent company
of Hudson River Bank & Trust Company, among other matters. (See page 34).
Our board of directors was aware of these interests and considered them
in its decision to approve the merger agreement.
4
INFORMATION ABOUT AMBANC
Ambanc Holding Co., Inc. was formed as a Delaware corporation in June
1995 to act as the holding company for Mohawk Community Bank (formerly known as
Amsterdam Savings Bank, FSB) upon the completion of the Bank's conversion from
mutual to stock form (the "Conversion"). The Conversion was completed on
December 26, 1995. At June 30, 2001, we had $711 million of assets and
stockholders' equity of $77 million or 10.8% of total assets.
On November 16, 1998, we acquired AFSALA Bancorp. Inc. and its wholly
owned subsidiary, Amsterdam Federal Bank. At the date of the merger, AFSALA had
approximately $167.1 million in assets, $144.1 million in deposits, and $19.2
million in stockholders' equity. Pursuant to the merger agreement, AFSALA was
merged with and into us, and Amsterdam Federal Bank was merged with and into the
former Amsterdam Savings Bank, FSB. The combined bank now operates as one
institution under the name "Mohawk Community Bank."
The Bank, organized in 1886, is a federally chartered savings bank
headquartered in Amsterdam, New York. The principal business of the Bank
consists of attracting retail deposits from the general public and using those
funds, together with borrowings and other funds, to originate primarily one-
to-four family residential mortgage loans, home equity loans and consumer loans.
Revenues are derived primarily from interest on loans, mortgage-backed and
related securities and investments.
Upon completion of the merger, Hudson River Bancorp, Inc., the parent
holding company for Hudson River Bank & Trust Company, will have approximately
$2.6 billion in total assets and be the largest locally based financial
institution in the Capital District area.
WHERE YOU CAN FIND MORE INFORMATION
As a public company, we are obligated to file annual, quarterly and
current reports, proxy statements and other information with the SEC. You may
read and copy any reports, statements or other information that we file at the
SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. In addition, our public filings are available to
the public from commercial document retrieval services and on the Internet World
Wide Website maintained by the SEC at "http://www.sec.gov."
THE SPECIAL MEETING
Place, Time and Date
The special meeting is scheduled to be held at 1:00 p.m., Eastern Time,
on Monday, December 10, 2001, at our main office located at 11 Division Street,
Amsterdam, New York.
Matters to Be Considered
At the special meeting, you will be asked to approve a proposal to
adopt the Agreement and Plan of Merger ("Agreement"). As of November 2, 2001, we
do not know of any business that will be presented for consideration at the
special meeting other than the proposal to adopt the Agreement. If such
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other matters are properly brought before the special meeting, or any
adjournments or postponements of the special meeting, our board of directors
will have the discretion to vote or act on such matters according to their best
judgment.
Record Date; Vote Required
Only our stockholders of record at the close of business on October 23,
2001 are entitled to notice of and to vote at the special meeting. As provided
in our certificate of incorporation, no one who beneficially owns, either
directly or indirectly, in excess of 10% of our outstanding shares will be
entitled to vote any shares held in excess of the 10% limit. As of October 23,
2001 there were 4,496,178 shares of our common stock outstanding and entitled to
vote at the special meeting.
Each outstanding share of our common stock will be entitled to cast one
vote per share at the special meeting. You may vote in person or by submitting a
properly executed proxy. The presence, in person or by properly executed
proxies, of the holders of at least one-third of all the shares entitled to vote
at the special meeting will constitute a quorum. Abstentions and broker
non-votes will be treated as shares present at the special meeting for purposes
of determining the presence of a quorum. A broker non-vote is an unvoted proxy
submitted by a broker. Under applicable rules, brokers or other nominees who
hold shares in street name for customers who are the beneficial owners of such
shares may not vote those shares with respect to the merger agreement unless
they have received specific instructions from their customers.
To adopt the Agreement, the holders of a majority of the outstanding
shares of Ambanc common stock entitled to vote must vote in favor of the
adoption of the merger agreement. Consequently, a failure to vote, an abstention
or a broker non-vote will have the same effect as voting against the merger
agreement. Broker non-votes will have no effect on this proposal.
Adoption of the Agreement by our stockholders is one of the conditions
that must be satisfied to complete the merger. See "The Merger - Conditions to
the Merger."
Beneficial Ownership of Ambanc Common Stock
As of October 23, 2001, our directors and executive officers and their
affiliates beneficially owned in the aggregate 1,019,362 shares of our common
stock, or 21.7% of our outstanding shares of common stock entitled to vote at
the special meeting. Each of our executive officers and directors have entered
into a voting agreement with Hudson River Bank & Trust Company agreeing to vote
their shares of Ambanc common stock in favor of the adoption of the Agreement.
As of October 23, 2001, Hudson River Bank & Trust Company did not own any shares
of Ambanc common stock.
Ambanc Common Stock
Our common stock is traded on the Nasdaq National Market under the
symbol "AHCI." On September 4, 2001, the last trading day prior to the joint
announcement by Ambanc and Hudson River Bank & Trust Company that they had
entered into the merger agreement, the closing price per share of our common
stock was $20.40. On October 26, 2001, which is the last practicable date prior
to printing this proxy statement, the closing price per share of our common
stock was $21.10.
6
Proxies
Shares of our common stock represented by properly executed proxies
received prior to or at the special meeting will, unless they have been revoked,
be voted at the special meeting in accordance with the instructions indicated in
the proxies. If no instructions are indicated on a properly executed proxy, the
shares will be voted "FOR" the adoption of the Agreement.
You should complete and return the proxy form accompanying this proxy
statement to ensure that your vote is counted at the special meeting, regardless
of whether you plan to attend the special meeting. If you are the record holder
of your shares, you can revoke your proxy at any time before the vote is taken
at the special meeting by:
* submitting written notice of revocation to the Secretary of
Ambanc,
* submitting a properly executed proxy of a later date, or
* voting in person at the special meeting, but simply attending the
special meeting without voting will not revoke an earlier proxy.
Written notice of revocation and other communications about revoking
your proxy should be addressed to:
Ambanc Holding Co., Inc.
11 Division Street
Amsterdam, New York 12010-4303
Attention: Robert Kelly, Secretary
If any other matters are properly presented at the special meeting for
consideration, the proxy holders will have discretion to vote on such matters in
accordance with their best judgment. As of November 2, 2001, we know of no other
matters to be presented at the meeting.
Certain material events or changes in circumstances including a
material amendment to the Agreement or a material revision of the fairness
opinion issued by FinPro may result in a resolicitation of your vote. Under
those circumstances, we will provide you with supplemental information about the
material event or change in circumstances and give you an opportunity to recast
your vote.
If your Ambanc common stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow to
have your shares voted. Your broker, bank or other nominee may allow you to
deliver your voting instructions via telephone or the Internet. Please see your
instruction form provided by your broker, bank or other nominee that accompanies
this proxy statement.
In addition to solicitation by mail, our directors, officers and
employees, who will not receive additional compensation for such services, may
solicit proxies from our stockholders, personally or by telephone, telegram or
other forms of communication. Brokerage houses, nominees, fiduciaries and other
custodians will be requested to forward soliciting materials to beneficial
owners and will be reimbursed for their reasonable expenses incurred in sending
proxy material to beneficial owners. We will bear our own expenses in connection
with the solicitation of proxies for the special meeting.
7
In addition to solicitations by mail, our directors, officers and
employees may solicit proxies personally or by telephone without additional
compensation. We have retained D.F. King & Co., Inc. a professional proxy
solicitation firm, to assist in the solicitation of proxies. We will pay D.F.
King & Co., Inc. a fee of $10,500, inclusive of expenses.
You are requested to complete, date and sign the accompanying proxy
form and to return it promptly in the enclosed postage-paid envelope.
You should not forward stock certificates with your proxy forms.
THE MERGER
The information in this proxy statement concerning the terms of the
merger is qualified in its entirety by reference to the full text of the
Agreement, which is attached as Appendix A and incorporated by reference herein.
All stockholders are urged to read the Agreement in its entirety, as well as the
opinion of our financial advisor attached as Appendix B.
General
As soon as possible after the conditions to consummation of the merger
described below have been satisfied or waived, and unless the Agreement has been
terminated or an alternative structure used as discussed below, Ambanc Holding
Co., Inc. ("Ambanc") and a subsidiary of Hudson River Bank & Trust Company
("Hudson River") will merge in accordance with Delaware law. Ambanc will be the
surviving corporation of the merger and will become a subsidiary of Hudson
River. Simultaneously with the merger, Ambanc will be liquidated and dissolved
by transferring all of its assets and liabilities to Hudson River. Immediately
after the liquidation is completed, Mohawk Community Bank will merge with and
into Hudson River. Hudson River will be the surviving bank.
Upon completion of the merger, our stockholders will be entitled to
receive $21.50 in cash for each share of Ambanc common stock they hold and will
cease to be stockholders of Ambanc. If the merger is completed on or before
March 17, 2002, Lawrence B. Seidman, currently Chairman of the Board of Ambanc,
will become a director of Hudson River for a term of office to end on March 17,
2002. No other directors from Ambanc will become directors of Hudson River.
The Companies
Ambanc Holding Co., Inc.
11 Division Street
Amsterdam, New York 12010-4303
(518) 842-7200
Ambanc is a Delaware corporation and is the unitary savings and loan
holding company for Mohawk Community Bank. Mohawk Community Bank is a
federally-chartered savings bank which is headquartered in Amsterdam, New York.
Mohawk Community Bank operates 16 branch offices located in Albany, Schenectady,
Saratoga, Montgomery, Fulton, Chenango, Schoharie and Otsego Counties in New
York.
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Hudson River Bank & Trust Company
One Hudson City Centre
Hudson, New York 12534
(518) 828-4600
Hudson River is a New York chartered savings bank and the wholly owned
subsidiary of Hudson River Bancorp, Inc., a Delaware corporation. Hudson River
operates 37 full-service branch offices located in Columbia, Rensselaer, Albany,
Saratoga, Schenectady, Greene, Warren, and Dutchess counties in the New York
region.
Background of the Merger
Over the last several years, the financial services industry has become
increasingly competitive and has undergone industry-wide consolidation. The
market in which Hudson River and Ambanc operate has been affected by this trend,
experiencing a period of rapid acquisition and consolidation that has affected
many of the banks and thrift institutions. In addition, large financial
institutions have entered this market through acquisitions of local financial
institutions. In response to these developments, the board of Ambanc has, on an
ongoing basis, considered strategic options for increasing stockholder value,
including potential acquisitions of other institutions and the sale of Ambanc.
In August 1998, Ambanc retained Sandler O'Neill & Partners, L.P. to
explore strategic options for Ambanc which could result in the sale or merger of
Ambanc. As part of this process, Cohoes Bancorp, Inc., a then Delaware
corporation and parent corporation of Cohoes Savings Bank and now a wholly-
owned subsidiary of Hudson River Bancorp, Inc., was contacted to ascertain
whether it had any interest in a strategic combination with Ambanc. In the late
spring of 1999, Cohoes indicated an interest regarding a possible acquisition of
Ambanc. In furtherance of this possible business combination, the parties
entered into a confidentiality agreement whereupon Ambanc furnished Cohoes with
certain business and other information regarding Ambanc. In June 1999, Cohoes
made a nonbinding expression of interest to acquire Ambanc which, after further
negotiations with Cohoes, was ultimately rejected by the Ambanc Board of
Directors due to the inadequacy of the potential purchase price in July 1999.
Subsequently, in October 1999, the Presidents of the two companies informally
discussed possible business combinations and the parties recommenced discussions
regarding a possible acquisition of Ambanc by Cohoes. In December 1999, Cohoes
again made a nonbinding expression of interest to acquire Ambanc. After several
weeks of negotiations and due diligence, Cohoes withdrew its proposal in January
2000.
In October 1999, Ambanc was also approached and began discussions with
a local financial institution about an acquisition of Ambanc. This nonbinding
proposal provided that Ambanc would be acquired in an all stock transaction with
a potential purchase price that was significantly above Ambanc's trading price
at the time the proposal was being discussed. The parties did commence due
diligence and the discussions continued until December 1999. However, the
proposed buyer insisted on conditions that were unacceptable to Ambanc.
Accordingly, the discussions were terminated in December 1999 without reaching a
definitive acquisition agreement.
On April 25, 2000, the boards of Cohoes and Hudson River Bancorp, Inc.
announced that they had entered into a merger agreement to combine through a
merger of equals. Following the announcement of the proposed merger of equals,
Ambanc terminated its relationship with Sandler O'Neill & Partners, L.P. and
retained FinPro, Inc. to review its strategic options.
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In May 2000, the President of Cohoes contacted the President of Ambanc
regarding the possibility of an acquisition of Ambanc by Cohoes. In June 2000,
representatives of the companies met twice to discuss the possibility of an
acquisition. After Cohoes failed to make a proposal that was satisfactory to
Ambanc's board of directors, Ambanc considered the possibility of acquiring
Cohoes. On June 15, 2000, Ambanc made an acquisition proposal to the Cohoes
Board of Directors in which Ambanc would acquire Cohoes in a merger in which
each share of Cohoes' common stock would be exchanged for $14.75, in cash.
Subsequently, a director of Ambanc discussed with Cohoes' investment banker
Cohoes interest in acquiring Ambanc. On June 20, 2000, Cohoes and Hudson River
Bancorp, Inc. jointly made a nonbinding offer to acquire Ambanc, contingent
upon, among other things, the successful completion of the proposed merger of
equals. On June 23, 2000, representatives of Ambanc met with representatives of
Cohoes and Hudson to discuss the joint nonbinding proposal to acquire Ambanc and
Ambanc's proposed acquisition of Cohoes. Ambanc's representatives at the meeting
requested, among other things, that Cohoes increase its proposed price and drop
the condition that the proposed merger of equals be completed. Cohoes refused
this request and suggested that any negotiations had to be conducted through
Cohoes' investment banker. Accordingly, subsequent to this meeting, a director
of Ambanc and Ambanc's financial advisor contacted Cohoes' investment banker in
an attempt to negotiate a higher price for Ambanc and have the completion of the
proposed merger of equals removed as a condition precedent to the completion of
the Ambanc acquisition. On June 23, 2000, Ambanc revised its proposal to Cohoes
and offered to purchase each share of Cohoes' common stock for $15.25 in cash.
On June 26, 2000, Ambanc notified Cohoes and Hudson River Bancorp, Inc. that its
board had rejected the joint nonbinding proposal from Cohoes and Hudson River
Bancorp, Inc. because it concluded that the price was inadequate and the
conditions were not reasonable. The June 23, 2000, revised proposal of Ambanc to
acquire Cohoes was rejected by Cohoes in July 2000.
On July 27, 2000, Ambanc announced its intention to commence a tender
offer to purchase each outstanding share of Cohoes common stock for $16.50 in
cash, and shortly thereafter, Ambanc nominated three persons to be elected as
directors of Cohoes at the 2000 annual meeting of Cohoes stockholders. On August
9, 2000, we commenced our tender offer for Cohoes common stock, subject to
certain conditions. At a special meeting of Cohoes shareholders held on August
17, 2000, Cohoes' stockholders did not approve the merger of equals agreement
with Hudson River Bancorp, Inc. by the requisite vote, and as a result, Cohoes
and Hudson terminated the agreement in September 2000. On October 6, 2000, our
tender offer expired and no Cohoes shares were actually purchased by us, and on
November 3, 2000, we withdrew our director nominations.
In late October, still interested in pursuing an opportunity with
Cohoes, Ambanc re- affirmed its price of $16.50 per share. On November 24, 2000,
however, Hudson River Bancorp, Inc. and Cohoes announced the execution of a
merger agreement which was subsequently adopted by the requisite vote of the
Cohoes stockholders on February 15, 2001. Hudson River Bancorp, Inc. and Cohoes
consummated their merger on April 20, 2001.
In May 2001, Ambanc received an unsolicited proposal from a local
financial institution ("buyer") and commenced discussions regarding the possible
sale of Ambanc. This was the same local financial institution with which Ambanc
had similar discussions in October, 1999 as discussed above. Under the terms of
the proposal, Ambanc stockholders would have received a combination of cash and
common stock of the proposed buyer having an approximate market value at the
time the proposal was made that was significantly above the trading price of
Ambanc's stock. In the days immediately preceding the vote by Ambanc's board of
directors on the proposed acquisition agreement, during intensive negotiations,
the parties and their representatives agreed in principle on certain terms and
conditions to the transaction, most
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notably the circumstances under which the termination fee would be paid by
Ambanc. As set forth below, Ambanc and Buyer expressly agreed that Ambanc would:
* forego any ability to terminate the agreement in the event that
the market value of the buyer's stock decreased during the
pendency of the proposed transaction (so-called "price
protection") provided that Ambanc was permitted to terminate the
agreement if it was unable to obtain a fairness opinion from its
investment banking firm at the time of mailing its proxy
materials to stockholders to vote on the proposed transaction;
* pay the buyer a $5 million termination fee in the event that any
of the following occurred: (i) Ambanc's board of directors
determined that its fiduciary duties to stockholders required it
to enter into a competing transaction and it subsequently
terminated its agreement with the buyer and entered into an
acquisition agreement with a third party; (ii) Ambanc's board of
directors withdrew, modified or changed its recommendation
regarding the transaction in any manner adverse to the buyer; or
(iii) Ambanc materially breached any of the representations or
warranties it made in the agreement which were not subsequently
cured within certain time limits; and
* pay the $5 million termination fee in the event that the
agreement was terminated because Ambanc was unable to obtain the
fairness opinion of its investment banking firm or its
stockholders failed to adopt the agreement and, at any time
within six months of such termination, Ambanc entered into an
acquisition agreement with a third party, if prior to any such
termination a competing transaction had been made to Ambanc and
was publicly disclosed.
Despite the fact that authorized representatives of buyer expressly and
unequivocally agreed to the foregoing provisions, immediately prior to Ambanc
board action to adopt the agreement, the proposed buyer introduced new terms
that were dramatically different from those previously agreed upon by the
parties. For example, the buyer proposed, among other things, that Ambanc pay a
$2.5 million termination fee if Ambanc terminated the agreement because it could
not obtain a fairness opinion from its investment banking firm, regardless of
whether a competing transaction had been proposed or announced, and pay an
additional $2.5 million if it subsequently entered into an acquisition agreement
with a third party within six months of such termination.
The addition of this new condition would have required Ambanc to
essentially insure or indemnify the buyer in an amount of up to $5 million
against any decrease in the trading price of buyer's stock without any price
protection below a level at which Ambanc could obtain a fairness opinion for the
protection of its shareholders. The board believed this to be unacceptable as it
placed the board in the untenable possible position of either being
contractually obligated to recommend a merger transaction to its stockholders
that was not fair from a financial point of view or paying a termination fee to
buyer of up to $5 million. Because the board of directors has no control over
the market value of the buyer's stock, the board believed it could have been a
breach of the board's fiduciary duty to stockholders to agree to such
impractical conditions. Although Ambanc's board of directors determined that
this was an unreasonable risk to Ambanc's stockholders and it could not agree to
such terms, the board continued to attempt to negotiate an agreement and
suggested the parties agree to some minimum level of price protection on the
buyer's common stock. Notwithstanding Ambanc's good faith negotiations, the
buyer rejected Ambanc's proposal to impose any level of price protection and
discussions were ultimately terminated.
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In June 2001, representatives of Hudson River contacted representatives
of Ambanc regarding a possible business combination. Subsequently, officials
from the two companies spoke directly and agreed to speak again after Ambanc
released its results of operations for the quarter ended June 30, 2001. Ambanc
released its second fiscal quarter results of operations at the end of July
2001. Shortly thereafter in early August 2001, the parties met and discussed
informally a possible business combination. At the end of August 2001, extensive
due diligence was commenced by the parties and a discussion of material terms
and conditions of the proposed acquisition, including voting and standstill
agreements, began. The parties completed their due diligence by September 4,
2001, at which time significant terms and conditions, including voting and
standstill agreements, were finally negotiated. After receiving the written and
oral fairness opinion of Ambanc's financial advisor that the proposed
consideration in the merger was fair from a financial point of view to the
stockholders of Ambanc, Ambanc's board of directors approved the Agreement and
Plan of Merger at a board of directors meeting held late in the afternoon of
September 4, 2001. The adoption of the Agreement and Plan of Merger by the
parties was announced to the public in a press release issued later that
evening.
Our Reasons for the Merger; Recommendation of Your Board of Directors
Our Board of Directors believes that the terms of the merger agreement,
which are the product of arm's length negotiations between representatives of
Hudson River and Ambanc, are in the best interests of our stockholders. In the
course of reaching its determination, our Board of Directors considered the
following factors:
* the merger consideration to be paid to our stockholders in
relation to the market value, book value, earnings per share of
our common stock, and potential future market conditions,
* information concerning our financial condition, results of
operations, capital levels, asset quality and prospects,
* industry and economic conditions,
* our assessment of Hudson River's ability to pay the aggregate
merger consideration,
* the opinion of our financial advisor as to the fairness of the
merger consideration from a financial point of view to the
holders of our common stock,
* the general structure of the transaction and the compatibility of
management and business philosophy,
* the greater resources and product offerings that Hudson River
will have after the merger than we currently have,
* the impact of the merger on the depositors, employees, customers
and communities served by us through expanded commercial,
consumer and retail banking products and services,
* the results of our due diligence investigation of Hudson River,
including the likelihood of receiving the requisite regulatory
approvals in a timely manner, and
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* the ability of Hudson River, after the merger to compete in
relevant banking and non-banking markets.
In making its determination, our Board of Directors did not ascribe any
relative or specific weights to the factors which it considered. The foregoing
discussion of the factors considered by our Board is not intended to be
exhaustive, but it does include the material factors considered by our Board.
Our Board of Directors believes that the merger is in the best
interests of Ambanc and our stockholders. The Board of Directors unanimously
recommends that our stockholders vote for the adoption of the merger agreement.
The Consideration is Fair According to FinPro, Inc., Our Financial Advisor.
We retained FinPro, Inc. ("FinPro"), a financial consulting and
investment banking firm, on the basis of its experience, to render a written
opinion to us and our stockholders as to the fairness, from a financial point of
view, of the per share price to be paid for each outstanding share of Ambanc
common stock, as set forth in the Agreement. We placed no limitations on FinPro
with respect to the investigation made, or procedures followed by FinPro in
rendering its opinion.
FinPro has been in the business of consulting for the bank and thrift
industry for fourteen years, including the appraisal and valuation of banking
and thrift institutions and their securities in connection with mergers,
acquisitions and other securities transactions. FinPro has knowledge of and
experience with the New York state bank and thrift market and financial
organizations operating in that market. FinPro reviewed the negotiated terms of
the Agreement.
On September 4, 2001, in connection with its consideration of the
Agreement, FinPro issued an oral and a written opinion to the Board of Directors
of Ambanc that the proposed per share cash consideration value, $21.50, of the
merger as provided in the Agreement is fair and equitable, from a financial
perspective, to Ambanc and its stockholders. The analysis presented in the oral
opinion was subsequently updated. A copy of the written opinion is attached as
Appendix B to this proxy statement and should be read in its entirety by Ambanc
stockholders. FinPro's written opinion does not constitute an endorsement of the
merger or a recommendation to any stockholder as to how such stockholder should
vote at the special meeting. FinPro has consented to the inclusion of this
summary of its opinion to Ambanc's board of directors in writing and to
reference the entire opinion attached as Appendix B.
In rendering its opinion, FinPro reviewed certain publicly available
information concerning Ambanc and Hudson River, including each party's audited
financial statements and annual reports. FinPro considered many factors in
making its evaluation. In arriving at its opinion regarding the fairness of the
per share price, FinPro reviewed: (i) the Agreement and the exhibits thereto;
(ii) changes in the market for bank and thrift stocks; (iii) the performance of
Hudson River Bancorp, Inc. and Ambanc common stock; (iv) trends and changes in
the financial condition of Hudson River and Ambanc; (v) the level of
nonperforming loans and corresponding level of the loan loss allowance of Hudson
River and Ambanc; (vi) the most recent annual report to stockholders and annual
report on Form 10-K of Hudson River Bancorp, Inc. and Ambanc; (vii) quarterly
reports on Form 10-Q of Hudson River Bancorp, Inc. and Ambanc; (viii) the budget
of Ambanc; (ix) recent regulatory exam reports of Hudson River and Hudson River
Bancorp, Inc; (x) the minutes of the meetings of the Board of Directors of
Hudson River Bancorp, Inc. over the last year; and (xi) other market data,
studies and analyses that were considered appropriate. FinPro conducted due
diligence on Hudson River Bancorp, Inc. in August 2001. The due diligence
focused on the financial ability of Hudson River to complete the transaction and
any regulatory obstacles
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that may hinder the consummation of the transaction. FinPro conducted an on-site
review of Hudson River Bancorp, Inc.'s historical performance and current
financial condition.
In addition, FinPro discussed with the management of Ambanc its
operating performance and future prospects, primarily with respect to the
current level of Ambanc's earnings and future expected operating results, giving
weight to FinPro's assessment of the future of the thrift industry and Ambanc's
performance within the industry. FinPro compared the results of operation of
Ambanc with the results of operation of all publicly traded thrift institutions
and a selected Comparable Trading Group.
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*For the most recent quarter
--------------------------------------------------
Comparable All Publicly
Trading Group Traded Thrift
Ambanc Median Median
--------------------------------------------------
Balance Sheet:
Assets ($000's) 711,095 830,972 462,511
Asset Growth -1.88% 6.74% 4.87%
Loans to Assets 66.14% 59.22% 70.15%
Deposits to Assets 69.34% 61.26% 67.66%
Borrowing to Assets 18.39% 26.16% 19.96%
Tangible Equity to Tangible Assets 10.03% 7.51% 9.16%
Asset Quality:
Nonperforming Loans to Loans 0.60% 0.41% 0.45%
Nonperforming Assets to Assets 0.45% 0.36% 0.39%
Reserves to Nonperforming Loans 201.31% 143.06% 152.78%
Reserves to Loans 1.21% 0.63% 0.85%
Income Statement and Profitability:
Return on Ave. Assets 0.43% 0.67% 0.81%
Return on Ave. Equity 3.99% 9.06% 7.94%
Yield on Earning Assets 7.03% 7.03% 7.45%
Cost of Funds 4.76% 4.65% 4.79%
Net Interest Margin 2.87% 2.75% 3.14%
Noninterest Income to Ave. Assets 0.36% 0.36% 0.51%
Noninterest Expense to Ave. Assets 2.39% 2.05% 2.32%
Efficiency Ratio 74.79% 65.53% 61.94%
Dividends:
Current Dividend Yield 3.25% 3.20% 2.54%
LTM Dividend Payout Ratio 69.05% 34.28% 34.49%
Market Pricing at October 18, 2001:
Price to LTM EPS 24.92x 12.57x 13.63x
Price to LTM Core EPS 32.70x 13.00x 13.84x
Price to Book Value 117.45% 107.11% 103.84%
Price to Tangible Book Value 128.40% 115.94% 108.46%
*Source: The SNL DataSource, data is for the most recent quarter as of October
18, 2001 unless otherwise noted.
Many variables affect the value of financial institutions, not the
least of which is the uncertainty of future events, so that the relative
importance of the different valuation variables differs in different situations,
with the result that appraisal theorists argue about which variables are the
most appropriate ones on which to focus. However, most appraisers agree that the
primary financial variables to be considered are earnings, equity, dividends or
dividend-paying capacity, asset quality and cash flow. In addition, in most
instances, if not all, value is further tempered by non-financial factors such
as marketability, voting rights or block size, history of past sales of the
entity's stock and special ownership or management considerations.
FinPro analyzed the total merger price on a cash equivalent fair market
value basis using the standard evaluation techniques (as discussed below)
including, but not limited to, comparable sales
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multiples and the net present value of dividends and terminal value based on
certain assumptions of projected growth, earnings and dividends.
Net Asset Value
Net asset value is the value of the net equity of a thrift institution,
including every kind of property and value. This approach normally assumes
liquidation on the date of appraisal with the recognition of securities gains or
losses, real estate appreciation or depreciation, adjustments to the loan loss
reserve, discount to the loan portfolio and changes in the net value of other
assets. As such, it is not the best approach to use when valuing a going
concern, because it is based on historical costs and varying accounting methods.
Even if the assets and liabilities are adjusted to reflect prevailing prices and
yields (which is often of limited accuracy because readily available data is
often lacking), it still results in a liquidation value for the concern.
Furthermore, because this method does not take into account the values
attributable to the going concern such as the interrelationship among the
company's assets and liabilities, customer relations, market presence, image and
reputation, and staff expertise and depth, little weight is given by FinPro to
the net asset value method of valuation.
Market Value
Market value is generally defined as the price, established on an
"arms-length" basis, at which knowledgeable, unrelated buyers and sellers would
agree to transfer shares. The market value is frequently used to determine the
price of a minority block of stock when both the quantity and the quality of the
"comparable" data are deemed sufficient. However, the relative thinness of the
specific market for the stock of the thrift institution being appraised may
result in the need to review alternative markets for comparative pricing
purposes. The "hypothetical" market value for a small thrift with a thin market
for its stock is normally determined by comparison to the median price to
earnings, price to equity and dividend yield of local or regional
publicly-traded thrift institutions, adjusting for significant differences in
financial performance criteria and for any lack of marketability or liquidity.
The market value in connection with the evaluation of control of a thrift is
determined by the previous sales of thrifts. In valuing a business enterprise,
when sufficient comparable trade data is available, the market value deserves
greater weight than the net asset value and similar emphasis as the investment
value as discussed below.
Analysis - Transaction Value
FinPro maintains substantial files concerning the prices paid for
thrift institutions nationwide. The database includes transactions involving New
York thrift institutions and thrift institutions in the Mid- Atlantic region of
the United States over the last five years. The database provides comparable
pricing and financial performance data for thrift institutions sold or acquired.
Organized by different peer groups, the data present averages of financial
performance and purchase price levels, thereby facilitating a valid comparative
purchase price analysis. In analyzing the transaction value of Ambanc, FinPro
has considered the market approach and has evaluated price to earnings, price to
equity, price to tangible equity and franchise premium to core deposits for a
defined comparable group.
Select Merger Multiples
During FinPro's analysis of recent merger multiples in relationship to
the proposed transaction, FinPro placed a heavy reliance on the "Comparable
Group" multiples. The "Comparable Group" was composed of all thrift institutions
that announced sales between January 1, 2000 and October 18, 2001 with announced
deal values greater than $50 million where the target institution had a return
on average equity
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less than 10.00%. The following table illustrates the maximum, minimum and
median multiples of the "Comparable Group".
Franchise
Price to Tangible Price to LTM Premium to
Price to Book Book Earnings Core Deposits
------------- ---- -------- -------------
Maximum 169.07% 171.33% 54.63x 51.66%
Minimum 104.75% 104.75% 12.34x 3.87%
Median 133.16% 137.24% 18.52x 8.85%
Proposed Price 125.44% 137.20% 25.60x 6.78%
*Source: SNL Securities, FinPro calculations.
------
*Note: The calculation of Ambanc's book value and tangible book value includes
---- unallocated ESOP and MRP shares.
The financial performance characteristics of the selected thrift
organizations vary, sometimes substantially, from those of Ambanc. As such, this
analysis is not a simple mathematical formula, but rather a series of
considerations and judgements, regarding the financial performance and value of
each of the companies.
FinPro also compared the multiples of the proposed transaction to the
pricing of the Hudson River Bancorp, Inc./Cohoes Bancorp, Inc. merger. This
merger was deemed to be a particularly strong comparable based upon the
proximate location of Cohoes, the financial condition and results from
operations of Cohoes and the timeliness of the acquisition.
Price to Franchise
Tangible Price to LTM Premium to
Price to Book Book Earnings Core Deposits
------------- ---- -------- -------------
Hudson River Bancorp, 124.84% 125.89% 25.66x 8.28%
Inc./ Cohoes
Hudson River/ Ambanc 125.44% 137.20% 25.60x 6.78%
*Source: SNL Securities, FinPro calculations.
------
*Note: The calculation of Ambanc's book value and tangible book value includes
---- unallocated ESOP and MRP shares.
Investment Value
The investment value is sometimes referred to as the income value or
earnings value. One investment value method frequently used estimates the
present value of an enterprise's future earnings or cash flow. Another popular
investment value method is to determine the level of current annual benefits
(earnings, cash flow, dividends, etc.), and then capitalize one or more of the
benefit types using an appropriate capitalization rate such as an earnings or
dividend yield. Yet another method of calculating investment value is a cash
flow analysis of the ability of a thrift to service acquisition debt obligations
(at
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a certain price level) while providing sufficient earnings for reasonable
dividends and capital adequacy requirements. In connection with the cash flow
analysis, the return on investment that would accrue to a prospective buyer at
the transaction value is calculated. The investment value method, which was
analyzed in connection with this transaction, was the net present value of
dividends stream and terminal value, which is discussed below.
Net Present Value of Dividends Stream and Terminal Value
The investment of earnings value of any banking institution's stock is
an estimate of present value of the future benefits, usually earnings, cash flow
or dividends, which will accrue to the stock. FinPro calculated a net present
value of dividends stream and terminal value through 2005 under a number of
iterations. The annual earnings growth rates ranged from 8.00% to 15.00%, with
dividend estimates based upon historical levels. The terminal value was
approximated using an acquisition price to book multiple of between 125% and
175%, which resulted in acquisition price to earnings multiples ranging between
17x to 18x. Discount rates between 8.00% and 15.00% were utilized. Based on
these assumptions, FinPro's calculation of the net present value of dividends
stream and terminal value per share ranged between $13.23 to $24.34. FinPro's
computations were based on an analysis of the thrift industry, the economic and
competitive situations currently existing in Ambanc's market area and its
current financial condition.
When the net asset value, market value and investment value methods are
subjectively weighed, using the appraiser's experience and judgment, it is
FinPro's opinion that the proposed merger consideration is fair from a financial
prospective to the holders of Ambanc's common stock.
In rendering its opinion, FinPro did not independently verify the asset
quality and financial condition of Ambanc or Hudson River, but instead relied
upon the data provided by or on behalf of Ambanc and Hudson River to be true and
accurate in all material respects.
Prior Relationships
Prior to being retained as Ambanc's financial advisor, FinPro has
provided financial advisory and consulting services to Ambanc. The revenues
derived from these services are insignificant when compared to the firm's total
gross revenues.
Compensation for Services Rendered
FinPro acted as Ambanc's financial advisor in connection with the
merger and will receive a fee equal to 1.00% of the aggregate deal value, or
approximately $1.0 million, a significant portion of which is contingent upon
consummation of the merger. In addition, FinPro will be reimbursed for
reasonable expenses related to the merger and Ambanc has indemnified FinPro in
connection with any matter related to the merger.
You Will Receive Cash for Your Shares of Ambanc Stock
Upon completion of the merger, each outstanding share of Ambanc common
stock (other than shares as to which dissenters' rights have been asserted and
perfected in accordance with Delaware law), shall be converted into and
represent the right to receive $21.50 in cash without any interest paid thereon.
The aggregate amount of the cash payment represents the merger consideration.
The merger consideration to be paid in connection with the merger is expected to
be approximately $100,760,157, including payment for the cancellation of all
outstanding Ambanc stock options and outstanding restricted shares.
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Treatment of Options and Restricted Shares
At the effective time of the merger, each outstanding stock option to
purchase Ambanc common stock, whether or not such option is then exercisable,
issued pursuant to the Ambanc 1997 Stock Option and Incentive Plan, will be
canceled and the holder of the unexercised stock option will be entitled to
receive a cash payment equal to $21.50 less the exercise price per share of the
stock option, multiplied by the number of shares of Ambanc common stock subject
to the stock option, less any required tax withholding.
At the effective time of the merger, each share of Ambanc restricted
stock outstanding immediately prior to the effective time of the merger shall be
canceled and the holder of the restricted stock will be entitled to receive a
cash payment equal to $21.50 for each such share, less any required tax
withholding.
Procedure for Surrendering Your Certificates
At or prior to the effective time of the merger, or at such other time
or times as Registrar and Transfer Company (the "exchange agent") may otherwise
request, Hudson River will deliver to the exchange agent an amount of cash equal
to the aggregate merger consideration. The exchange agent receiving the deposit
will act as paying agent for the benefit of the holders of certificates of
Ambanc common stock in exchange for the merger consideration. Each holder of
Ambanc common stock who surrenders his or her Ambanc shares to the exchange
agent will be entitled to receive a cash payment of $21.50 per share of Ambanc
common stock upon acceptance of the shares by the exchange agent.
No later than five business days after the effective time of the
merger, a letter of transmittal will be mailed by the exchange agent to Ambanc
stockholders. The letter of transmittal will contain instructions for
surrendering your certificates of Ambanc common stock. Each holder of an Ambanc
stock certificate (other than holders who perfect their dissenters' rights) who
surrenders such certificate to the exchange agent will, upon acceptance thereof
by the exchange agent, be entitled to the merger consideration to be paid within
seven business days of acceptance by the exchange agent.
You should not return your Ambanc common stock certificates with the
enclosed proxy, and you should not send your stock certificates to the exchange
agent until you receive the letter of transmittal.
If a certificate for Ambanc common stock has been lost, stolen or
destroyed, the exchange agent is not obligated to deliver payment until the
holder of the shares delivers:
* an appropriate affidavit by the person claiming the loss, theft
or destruction of his or her certificate,
* an indemnity agreement, and
* if required by the exchange agent or Hudson River, a bond.
After six months following the effective time of the merger, the
exchange agent will deliver to Hudson River any funds not claimed by former
Ambanc stockholders. Thereafter, the payment obligation for any certificate
representing Ambanc common stock which has not been satisfied will become the
responsibility of Hudson River.
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If certificates for Ambanc common stock are not surrendered prior to
the date on which such payments would otherwise escheat to or become the
property of any governmental agency, the unclaimed amounts will become the
property of Hudson River to the extent permitted by applicable law, free and
clear of all claims or interest of any person previously entitled to such
property. None of Hudson River, Ambanc, the exchange agent or any other party to
the merger will be liable to any former holder of Ambanc common stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
Representations and Warranties Made by Us and Hudson River Bank & Trust Company
The merger agreement contains representations and warranties made by us
and Hudson River which are customary for this type of merger transaction,
including, among others, representations and warranties concerning:
* the organization, standing and authority of Ambanc and Hudson
River,
* the due authorization, execution, delivery and performance of the
merger agreement,
* the financial statements of Hudson River and us,
* the receipt of a fairness opinion from Ambanc's financial advisor
regarding the merger consideration,
* the regulatory reports filed by Ambanc and Hudson River and their
subsidiaries,
* governmental approvals required for the consummation of the
merger,
* the absence of actions, facts or circumstances that would
materially impede or delay consummation of the merger, and
* the accuracy of the information in this proxy statement.
We made certain additional representations and warranties (which are
also customary), among others, regarding our capitalization, our subsidiaries,
the absence of certain interim events, the absence of any broker's and finder's
fees other than that owed FinPro, our equity holdings in other companies, other
material agreements, employee and officer benefit plans, registration of our
securities, our compliance with laws, absence of certain violations as a result
of the merger, litigation and environmental matters, the adequacy of insurance
coverage, labor matters, any claims for indemnification, the status of our loan
and investment portfolios, the absence of certain defaults, the value of real
estate loans and investments, tax matters, the absence of derivative contracts,
real estate owned or leased by us, material interests of certain persons and the
accuracy of our disclosures. Hudson River has represented that it will have the
funds sufficient to pay the merger consideration required of it under the merger
agreement.
Some of the representations and warranties made by us are qualified by
materiality. The representations, warranties, agreements and covenants in the
merger agreement will expire at the effective time of the merger, except for
agreements and covenants that by their terms are to be performed after the
effective time of the merger. If the merger agreement is terminated, there will
be no liability on the part of either us or Hudson River other than the possible
payment of liquidated damages to Hudson River as discussed below under
"-Termination of the Merger Agreement," and except that no party shall be
relieved
20
or released from any liability arising out of a willful breach by it of any
covenant, undertaking representation or warranty in the merger agreement.
Conditions to the Merger
The respective obligations of Hudson River and Ambanc to effect the
merger are subject to the satisfaction or waiver of the following conditions
specified in the merger agreement:
* adoption of the merger agreement by our stockholders,
* the receipt of all required regulatory and third party approvals,
consents or waivers; provided that none of such approvals,
consents or waivers contain in the reasonable opinion of Hudson
River, any conditions or requirements that would materially
reduce the economic or business benefits of the merger to Hudson
River,
* the absence of any statute, rule, regulation, injunction or other
order which prohibits, restricts or makes illegal the completion
of the merger,
* the absence of any order, decree or injunction issued by a court
or agency of competent jurisdiction which prevents the completion
of the merger,
* the accuracy of the other party's representations and warranties
in all material respects,
* the performance by the other party of its obligations contained
in the merger agreement in all material respects,
* the receipt of certain certificates, and
* from the date of the merger agreement to the closing of the
merger, neither Ambanc nor Hudson River will have been affected
by any event which has had or caused, or is reasonably likely to
have or cause, a material adverse effect.
Hudson River's obligation to effect the merger also is subject to the
following conditions:
* No more than ten percent of the outstanding shares of Ambanc
common stock are dissenting shares.
Ambanc's obligation to effect the merger is also subject to the
following condition:
* Ambanc shall have received, as of the date of the proxy
statement, or as of a date not more than five business days prior
thereto, an updated written opinion of its financial advisor that
the consideration to be received by Ambanc stockholders in the
merger is fair from a financial point of view.
There can be no assurance that the conditions to consummation of the
merger will be satisfied or waived. The merger will become effective when the
certificate of merger is filed with the Secretary of State of the State of
Delaware. It is currently anticipated that the effective time of the merger will
occur during the first quarter of 2002.
21
Conduct of Business Prior to the Completion of the Merger
We have agreed that during the period from the date of the merger
agreement to the effective time of the merger (except as expressly provided in
the merger agreement), we and our subsidiaries will:
* use our reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary
or advisable under applicable laws and regulations so as to
permit and otherwise enable completion of the merger not later
than March 31, 2002, and shall cooperate fully with Hudson River
to that end,
* conduct our business in the ordinary course consistent with our
past practice,
* preserve intact our business organization,
* keep available the services of our employees,
* preserve the goodwill of our customers and business
relationships,
* confer regularly with Hudson River regarding our consolidated
financial condition, operations and business and matters relating
to the completion of the merger transactions; deliver to Hudson
River all reports and documents filed by us or Mohawk Community
Bank with the SEC or under banking regulations; and deliver to
Hudson River monthly consolidated balance sheets and statement of
income, and
* provide to Hudson River a report of a phase one environmental
investigation on certain real property owned or leased by Ambanc.
After receipt of the phase one environmental investigation,
Hudson River may request Ambanc to provide a phase two
investigation on properties determined by Hudson River as
requiring additional study. Hudson River has seven business days
from the receipt of any such phase two investigation report to
notify Ambanc of any dissatisfaction with the contents of such
report. Should the cost of taking all remedial or other
corrective actions and measures (i) required by applicable law or
reasonably likely to be required by applicable law, or (ii)
recommended or suggested by such report exceed the sum of
$500,000 as reasonably estimated by an environmental expert, or
if the cost of such actions and measures cannot be so reasonably
estimated by such expert to be an amount equal to or less than
$500,000, then Hudson River has the right to terminate the
Agreement. The costs of the phase one investigations, if any,
shall be borne by Ambanc. The costs of the phase two
investigations, if any, shall be borne by Hudson River.
We also have agreed, among other things, that, except as contemplated
by the merger agreement or unless Hudson River provides its written consent, we
and our subsidiaries will not:
* declare, set aside, make or pay any dividend or other
distribution, except for regularly quarterly dividends not to
exceed $0.17 per share of Ambanc common stock, with record and
payment dates consistent with past practices, but only to the
extent that such dividends may be funded out of current earnings,
without regard to Ambanc's severance costs or the financial
reporting expense relating to the retirement of its ESOP loan,
22
* issue, grant, modify, authorize or purchase shares of our common
stock, with certain exceptions,
* amend our certificate of incorporation, bylaws, or similar
organizational documents,
* increase the rate of compensation of our directors, officers or
employees, or pay or agree to pay any bonus, severance or any
other new benefit to our directors, officers or employees, with
certain exceptions,
* enter into or, except as may be required by law, modify any
employee benefit plan,
* originate or purchase any new brokered loans, any unsecured loan
in excess of $50,000, any loan secured by a first trust or
mortgage on a one- to- four family residential property in excess
of $350,000, or any loan secured by a first trust or mortgage on
commercial real property in excess of $400,000, except as
permitted by the merger agreement,
* enter into any transaction, agreement, arrangement, commitment,
contract, indenture or other instrument:
* not made in the ordinary course of business,
* relating to the borrowing of money or guarantee of any
obligations, with certain exceptions,
* relating to the employment of any employee or consultant, or
* with a labor union.
* change any of our methods of accounting or any of our methods of
reporting income and deductions for federal income tax purposes,
except as required by changes in laws, regulations or generally
accepted accounting principles,
* make any new capital expenditures in excess of $30,000
individually or $50,000 in the aggregate, other than pursuant to
binding commitments existing on the date of the merger agreement
or for expenditures necessary to maintain existing assets in good
repair,
* enter into any new agreement or renew any existing agreement that
involves an annual expenditure in excess of $15,000 unless such
agreement may be terminated at any time by Ambanc without a
penalty or premium upon not more than 60 days advance written
notice,
* file any applications or make any contract for branching, site
location or relocation,
* acquire in any manner whatsoever control over or any equity
interest in any business or entity, other than readily marketable
equity securities (of less than 5% of such securities
outstanding) in the ordinary course of business,
* enter or agree to enter into any agreement or arrangement
granting any preferential right to purchase any of our assets or
rights or requiring the consent of any party to the transfer and
assignment of any such assets or rights,
23
* materially change or modify any of our lending or investment
policies, except to the extent required by law, regulatory
authority or except as necessitated, in Ambanc's reasonable
opinion, due to changes in interest rates,
* enter into any futures contract, option contract, interest rate
caps, interest rate floors, interest rate exchange agreement or
other agreement for purposes of hedging the exposure of our
interest-earning assets and interest-bearing liabilities to
changes in market interest rates,
* knowingly take any action that would result in any of the
representations and warranties of Ambanc contained in the merger
agreement not to be true and correct in any material respect at
the effective time of the merger,
* knowingly take any action that would materially impede or delay
the completion of the merger or the ability of any party to the
merger agreement to perform its covenants and agreements under
the Agreement,
* materially increase or decrease the rate of interest paid on time
deposits, or on certificates of deposit, except in a manner and
pursuant to policies consistent with past practices, or
* agree to do any of the foregoing.
In addition, we have agreed that neither us nor any of our subsidiaries
or any of our officers, directors, employees, representatives or agents will
solicit or encourage inquiries or proposals with respect to, furnish any
information relating to, or participate in any negotiations or discussions
concerning, any acquisition, purchase of all or a substantial portion of the
assets of, or any equity interest in, Ambanc or Mohawk Community Bank. We are
permitted, however, to furnish information to or engage in discussions or
negotiations with third parties if, after having consulted with and considered
the advice of our counsel, we determine that the failure to do so may cause our
Board of Directors to breach its fiduciary duties. We are required to promptly
inform Hudson River, in writing, of any such requests for information or of any
negotiations or discussions.
If our Board of Directors determines, after consultation with our
financial advisor and legal counsel, that we have received an offer from a third
party that is superior to Hudson River's, we must notify Hudson River of our
intent to terminate the merger agreement. A superior offer means a written
proposal, including a tender offer, made by a third party to acquire, directly
or indirectly, for consideration consisting of cash and/or securities, more than
50% of Ambanc's outstanding shares of common stock, or all of, or substantially
all of, Ambanc's assets, and provides consideration to Ambanc stockholders which
our board of directors determines to be more favorable than the merger
consideration Hudson River is paying under the merger agreement, and for which
third party financing, to the extent required, is then firmly committed. If we
notify Hudson River of our intent to terminate the merger agreement, we must
specify the terms and conditions of the superior offer and identify the person
making the offer. Hudson River will have two business days to match the offer
from the third party, in which case we may not accept the offer from the third
party. We shall have two business days to evaluate Hudson River's revised
proposal to determine whether the revised merger consideration is equal to or
exceeds that proposed by the superior offer. If we determine that the new
consideration offered by Hudson River does not at least equal the superior
proposal, we may terminate the merger agreement and pay Hudson River a
termination fee of $3.0 million. See "Termination of the Merger Agreement."
24
Approvals Needed to Complete the Merger
In addition to the approval of the merger agreement by our
stockholders, completion of the merger and the transactions contemplated by the
merger agreement are subject to the prior approval of the Office of Thrift
Supervision ("OTS"), the Federal Deposit Insurance Corporation (the "FDIC") and
the New York State Banking Board. The required applications for these approvals
will be filed in the fourth quarter of 2001. In reviewing applications by the
OTS under the Home Owners Loan Act of 1933, as amended ("HOLA"), and by the FDIC
under the Bank Merger Act, both regulators must consider, among other factors,
the financial and managerial resources and future prospects of the existing and
resulting institutions, and the convenience and needs of the communities to be
served. In addition, the OTS and the FDIC may not approve a transaction if it
will result in a monopoly or otherwise be anti-competitive.
Under the Community Reinvestment Act of 1977, the OTS and the FDIC must
take into account the record of performance of Mohawk Community Bank and Hudson
River in meeting the credit needs of the entire community, including low- and
moderate-income neighborhoods, served by each institution. As part of the review
process, the banking agencies frequently receive comments and protests from
community groups and others. Mohawk Community Bank and Hudson River each
received a "satisfactory" rating during their respective last Community
Reinvestment Act examinations.
The New York State Banking Board also must approve the merger under its
regulations. The applications to the New York State Banking Board will be
substantially the same as the applications to the OTS and the FDIC.
In addition, a period of not less than 15 days must expire following
approval by the FDIC, within which period the United States Department of
Justice may file objections to the merger under the federal anti-trust laws.
Although we believe that the likelihood of such action by the Department of
Justice is remote in this merger, there can be no assurance that the Department
of Justice will not initiate such proceeding. If such proceeding is instituted
or challenge is made, we cannot ensure a favorable result.
We are not aware of any other regulatory approvals required for
completion of the merger, except as described above. Should any other approvals
be required, it is presently contemplated that such approvals would be sought.
There can be no assurance that any other approvals, if required, will be
obtained.
The approval of any application merely implies the satisfaction of
regulatory criteria for approval, which does not include review of the merger
from the standpoint of the adequacy of the consideration to be received by
Ambanc stockholders. Furthermore, regulatory approvals do not constitute an
endorsement or recommendation of the merger.
There can be no assurances that the requisite regulatory approvals will
be received in a timely manner, in which event the consummation of the merger
may be delayed. If the merger is not consummated on or before June 30, 2002, the
merger agreement may be terminated by either Hudson River or us.
It is a condition to the consummation of the merger that the regulatory
approvals be obtained without any conditions or requirements that are unduly
burdensome or would materially reduce the economic or business benefits of the
merger to Hudson River. No assurance can be provided that any such approvals
will not contain terms, conditions or requirements which fail to satisfy this
condition of the merger.
25
Waiver and Amendment of the Merger Agreement; Alternative Structure
By written approval of its Board of Directors, each party to the merger
agreement may extend the time for the performance of any of the obligations or
acts of the other party and may waive:
* any inaccuracies in the representations and warranties contained
in the merger agreement or any document delivered pursuant to the
merger agreement,
* compliance with any covenant, undertaking or agreement,
* to the extent permitted by law, satisfaction of any condition of
the merger agreement, or
* the performance by the other party of any of its obligations
under the merger agreement.
The merger agreement may be amended at any time by mutual agreement of
the parties as approved by their Boards, in writing; provided, however, that
after our stockholders have adopted the merger agreement no amendment can modify
the form or decrease the amount of the merger consideration or otherwise
materially adversely affect our stockholders without their approval.
Termination of the Merger Agreement
The merger agreement may be terminated in writing prior to the
effective time of the merger by:
* the mutual consent of the Boards of Hudson River and Ambanc,
* by the Boards of Hudson River or Ambanc if:
* the other party has materially breached any of its
covenants, agreements or representations and warranties and
the breach has not been cured within 30 days after the
giving of written notice,
* any governmental entity of competent jurisdiction issues a
final, nonappealable order prohibiting the completion of the
merger transactions or if any application for regulatory
approval is denied or withdrawn at the request or
recommendation of the regulatory authority, provided that
the denial or request or recommendation for withdrawal is
not due to a breach of any provision of the merger agreement
by the party seeking to terminate,
* our stockholders fail to adopt the merger agreement,
* the merger is not consummated by June 30, 2002, provided
that the party seeking to terminate is not then in breach of
any of its covenants, agreements or representations and
warranties.
* By the Board of Hudson River if our Board of Directors fails to
recommend, or fails to continue its recommendation, that our
stockholders adopt the merger agreement or if our Board modifies,
withdraws or changes in any manner adverse to Hudson River its
recommendation for adoption of the merger agreement,
26
* by our Board within ten business days after the receipt of a
superior offer to that of Hudson River's offer, and Hudson River
does not timely match the superior offer, or, if Hudson does
timely match the superior offer but our board determines that
Hudson River's offer is not at least equal to the superior offer,
* by Hudson River, in the event an environmental expert determines
that any of our property as set forth in the merger agreement is
in violation of any environmental law or regulation, and the cost
to correct such violation is in excess of $500,000 or cannot
reasonably be determined to be less than that amount.
In the event that the merger agreement is terminated, the merger
agreement will become void and have no effect, except for:
* provisions relating to confidential information,
* provisions relating to a liquidated damages fee in the amount of
$3.0 million payable to Hudson River by Ambanc following the
occurrence of:
* Hudson River's termination of the merger agreement if Ambanc
fails to either 1) recommend, or fails to continue to
recommend that Ambanc's stockholders vote in favor of the
adoption of the agreement, or 2) Ambanc modifies, withdraws,
or changes in any manner adverse to Hudson River its
recommendation that its stockholders vote in favor of the
adoption of the merger agreement, unless Ambanc stockholders
adopt the merger agreement;
* our termination of the merger agreement to accept a superior
offer from a third party;
* our or Hudson River's termination if the effective time of
the merger has not occurred by June 30, 2002, provided that
the terminating party is not in breach, in a material
respect, of any of the covenants, representations or
warranties or other agreements in the merger agreement, and,
prior to the termination, the Ambanc stockholders meeting
has not been held to vote on the adoption of the merger
agreement;
* our entering into an agreement with a third party relating
to an acquisition proposal to acquire us or Mohawk Community
Bank or the consummation of such an agreement within 18
months after termination of the merger agreement if an
acquisition proposal is made to Ambanc:
an acquisition proposal means a proposal to enter into a
merger or consolidation of Ambanc, the purchase of all or
substantially all Ambanc's assets, a purchase of more than
19.9% of Ambanc's voting stock, a tender offer or a proxy
contest, and either of the following thereafter occurs: (1)
termination of the merger agreement by Hudson River due to
our material breach of any of our covenants, agreements or
representations and warranties and the breach is not timely
cured; or (2) the failure of our stockholders to adopt the
merger agreement.
27
A breaching party will not be relieved from any liability or
damages for its willful breach of any provision of the
merger agreement. If demand is made to us to pay liquidated
damages and we timely pay such damages, then we are not
liable for any other damages under the merger agreement.
Interests of Directors and Officers in the Merger that are Different from Your
Interests
Some members of our management and Board of Directors may have
interests in the merger that are in addition to or different from the interests
of our stockholders. Our Board was aware of these interests and considered them
in approving the merger agreement.
Ambanc Stock Options. As of October 23, 2001, directors and executive
officers held options to purchase in the aggregate 534,794 shares of Ambanc
common stock under our stock option plan. Accordingly, each director and
executive officer will receive payment for their stock options as described
earlier in this proxy statement. The aggregate value of the payout for these
stock options will be approximately $3,782,164 million. Officers Lisicki,
Ziskin, Alescio and Nachod will receive payments of approximately $451,328,
$272,139, $205,751, and $59,700, respectively, upon payment for their stock
options. See " - Treatment of Options and Restricted Shares."
Ambanc Restricted Stock Awards. As of October 23, 2001, an aggregate of
5,855 shares of our common stock have been awarded to our directors pursuant to
the Ambanc recognition and retention plan. Accordingly, each director will
receive payment for their restricted shares as described earlier in this proxy
statement. The aggregate value of the payment for these restricted shares will
be approximately $125,882. See "-Treatment of Options and Restricted Shares."
Standstill Agreements. Two current directors of Ambanc, Mr. Seymour
Holtzman and Mr. Lawrence B. Seidman, and their respective affiliates, have
entered into an agreement prohibiting such persons from acquiring any voting
securities of Hudson River Bancorp, Inc., in excess of a specified aggregate
limitation, and further requiring such parties to vote any securities of Hudson
River Bancorp, Inc. currently owned or controlled by them with management of
Hudson River Bancorp, Inc. The Standstill Agreements will remain in effect for a
period of two years for Mr. Seidman and for a period of five years for Mr.
Holtzman following the effective time of the merger. In exchange for their
mutual promises, Mr. Holtzman will receive an initial payment of $49,000 and
annual payments of $35,000 per year thereafter for a period of four years, and
Mr. Seidman will receive two annual cash payments of $25,000.
Ambanc Employee Stock Ownership Plan. As of October 23, 2001, our ESOP
held 159,013 shares of our common stock which had not yet been allocated to
participants and which were pledged as collateral for the remaining $1,843,565
million loan to the ESOP. The ESOP will be terminated upon completion of the
merger, at which time the loan will be repaid with the cash received by the ESOP
in the merger. Based on the number of unallocated shares and the current loan
balance, the ESOP will have approximately $1,575,214 million of cash profit
after repayment of the ESOP loan, which cash will be allocated to the
participants in accordance with the terms of the ESOP and distributed to
participants in the ESOP following receipt of a favorable determination letter
from the Internal Revenue Service. Officers Lisicki, Ziskin, Alescio and Nachod
will receive allocations to their ESOP accounts of approximately $34,969,
$23,628, $20,950, and $10,227, respectively, based upon $1,575,214 million of
cash profit related to the unallocated shares.
28
Employment Agreements. Effective August, 2001, Ambanc and Mohawk
Community Bank entered into employment agreements with Messrs. Lisicki, Ziskin,
Alescio and Nachod. Under the employment agreements, Messrs. Lisicki, Ziskin,
Alescio and Nachod are each entitled to receive a severance payment upon
termination of their employment. The severance payments and benefits to Messrs.
Lisicki, Ziskin, Alescio and Nachod are approximately $920,000, $428,000,
$325,000 and $325,000, respectively, excluding payments for stock options and
restricted stock awards. Ambanc and Mohawk Community Bank also entered into
employment agreements with three other officers which entitle such persons to
payments in the aggregate of $326,794.
Change in Control Severance Agreements. Mohawk Community Bank entered
into change of control severance agreements with sixteen of its officers. The
change in control agreements provide for a payment to each of the officers equal
to between 50% and 100% of the officer's annual compensation for the preceding
one year period upon the officer's termination of his or her employment by the
Bank, other than for cause, or the officer terminates his or her employment for
good reason within 12 months following a change in control. For purposes of the
change in control agreements, the merger will constitute a "change in control."
The aggregate amount that may be payable under the change in control agreements
is approximately $432,000.
Deferred Compensation. Directors who previously deferred payment of a
portion of their directors fees shall, upon the effective date of the merger,
receive such deferred sums in a lump-sum payment.
Option to Purchase Loans by Director. At any time prior to the closing,
Mohawk Community Bank may, in the ordinary course of business, sell, transfer,
assign, convey or dispose of loans set forth in the merger agreement in
connection with the Bank's New Jersey Loan Production Office. To the extent that
any such loan is not sold at the effective time, Director Lawrence B. Seidman,
for a period of eighteen months after the effective time and excluding any
period during which Mr. Seidman remains a director of the Bank, may purchase
such remaining loans for a cash purchase price equal to the unpaid principal
balance of each loan, plus accrued interest.
Protection of Directors, Officers and Employees Against Claims. In the
merger agreement, Hudson River and Hudson River Bancorp, Inc. agreed to
indemnify our and our subsidiaries' directors and officers after the completion
of the merger. Hudson River also has agreed to maintain, for a period of three
years after the effective time of the merger, our and our subsidiaries' current
directors' and officers' liability insurance policies, provided that Hudson
River may substitute insurance policies of at least the same coverage and amount
containing terms and conditions which are substantially no less advantageous or
containing terms and conditions consistent with Hudson River's current insurance
policies, or Hudson River may purchase single limit tail coverage for the
three-year period.
Employees and Benefit Plans
The merger agreement provides that our and our subsidiaries' full-time
employees who remain employed by Hudson River after the effective time of the
merger will be eligible to participate in the benefit plans of Hudson River that
are generally available to their full-time employees subject to the terms and
provisions of the benefit plans. Continuing employees will receive credit for
years of service with us and our subsidiaries for purposes of determining
eligibility for participation, vesting and entitlement to vacation time and sick
pay (but not for purposes of accrual or restoration of benefits that are
calculated on an actuarial basis, including any qualified or non-qualified
defined benefit plan or restoration plan) with Hudson River. Contributions to
and accrual of benefits under benefit plans of Hudson River
29
on behalf of continuing employees will only relate to qualifying compensation
earned by the employees after the effective time of the merger, subject to the
terms and provisions of such benefit plans. Continuing full time employees will
not be eligible to participate in the Hudson River benefit restoration plan or
any qualified plan of Hudson River (other than Hudson River's 401(k) plan into
which Ambanc's 401(k) plan will merge) until the plan year commencing in 2003.
Severance Payments. In the event Hudson River terminates the employment
of any full time employee of Ambanc within six months of the effective date of
the merger, other than for cause, Hudson River agreed to provide each such
employee severance payments equal to such person's salary in effect at the time
of the effective date of the merger multiplied by the total number of whole
years of such employees' employment with Ambanc, up to a maximum of eight years.
Dissenters' Rights of Appraisal.
You Have Dissenters' Rights of Appraisal Under Delaware law, if you do
not wish to accept the cash payment provided for in the merger agreement, you
have the right to dissent from the merger and to have an appraisal of the fair
value of your shares conducted by the Delaware Court of Chancery. Stockholders
electing to exercise dissenters' rights must strictly comply with the provisions
of Section 262 of the Delaware General Corporation Law to perfect their rights.
A copy of Section 262 is attached as Appendix C.
The following is intended as a brief summary of the material provisions
of the Delaware statutory procedures required to dissent from the merger and
perfect a stockholder's dissenters' rights. This summary, however, is not a
complete statement of all applicable requirements and is qualified in its
entirety by reference to Section 262 of the Delaware General Corporation Law.
Section 262 requires that stockholders be notified not less than 20
days before the special meeting to vote on the merger that dissenters' appraisal
rights will be available. A copy of Section 262 must be included with such
notice. This proxy statement constitutes our notice to you of the availability
of dissenters' rights in connection with the merger. If you wish to consider
exercising your dissenters' rights you should carefully review the text of
Section 262 contained in Appendix C because failure to timely and properly
comply with the requirements of Section 262 will result in the loss of your
dissenters' rights under Delaware law.
If you elect to demand appraisal of your shares, you must satisfy all
of the following conditions:
* You must deliver to us a written demand for appraisal of your
shares before the vote with respect to the merger is taken. This
written demand for appraisal must be in addition to and separate
from any proxy or vote abstaining from or against the merger.
Voting against or failing to vote for the merger by itself does
not constitute a demand for appraisal within the meaning of
Section 262.
* You must not vote in favor of the merger. An abstention or
failure to vote will satisfy this requirement, but a vote in
favor of the merger, by proxy or in person, will constitute a
waiver of your dissenters' rights in respect of the shares so
voted and will nullify any previously filed written demands for
appraisal.
* You must continuously hold your shares of Ambanc common stock
through the effective time of the merger.
30
If you fail to comply with all of these conditions and the merger is
completed, you will be entitled to receive the cash payment for any shares of
Ambanc common stock you hold as of the effective time of the merger as provided
for in the merger agreement but will have no dissenters' rights of appraisal for
your shares of Ambanc common stock.
All demands for appraisal should be addressed to the Corporate
Secretary, Ambanc Holding Company, Inc., 11 Division Street, Amsterdam, New
York, 12010-4303, before the vote on the merger is taken at the special meeting,
and should be executed by, or on behalf of, the record holder of the shares of
Ambanc common stock. The demand must reasonably inform us of the identity of the
stockholder and the intention of the stockholder to demand appraisal of his or
her shares.
To be effective, a demand for appraisal by a holder of Ambanc common
stock must be made by or in the name of such registered stockholder, fully and
correctly, as the stockholder's name appears on his or her stock certificate(s)
and cannot be made by the beneficial owner if he or she does not also hold the
shares of record. The beneficial holder must, in such cases, have the registered
owner submit the required demand in respect of such shares.
If shares are owned of record in a fiduciary capacity, such as by a
trustee, guardian or custodian, execution of a demand for appraisal should be
made in such capacity. If the shares are owned of record by more than one
person, as in a joint tenancy or tenancy in common, the demand should be
executed by or for all joint owners. An authorized agent, including one of two
or more joint owners, may execute the demand for appraisal for a stockholder of
record. However, the agent must identify the record owner or owners and
expressly disclose the fact that, in executing the demand, he or she is acting
as agent for the record owner. A record owner, such as a broker, who holds
shares as a nominee for others, may exercise his or her right of appraisal with
respect to the shares held for one or more beneficial owners, while not
exercising this right for other beneficial owners. In such case, the written
demand should state the number of shares as to which appraisal is sought. Where
no number of shares is expressly mentioned, the demand will be presumed to cover
all shares held in the name of such record owner.
If you hold your shares of Ambanc common stock in a brokerage account
or in other nominee form and you wish to exercise appraisal rights, you should
consult with your broker or such other nominee to determine the appropriate
procedures for the making of a demand for appraisal by such nominee.
Within ten days after the effective date of the merger, Hudson River
must give written notice that the merger has become effective to each Ambanc
stockholder who has properly filed a written demand for appraisal and who did
not vote in favor of the merger. Within 120 days after the effective date,
either Hudson River or any stockholder who has complied with the requirements of
Section 262 may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the shares held by all stockholders entitled
to appraisal. A dissenting stockholder may request from Hudson River during this
120 day period a statement setting forth (a) the aggregate number of shares not
voted in favor of the merger and with respect to which demands for appraisal
have been received, and (b) the aggregate number of holders of such shares. We
have been informed that Hudson River does not presently intend to file such a
petition in the event there are dissenting stockholders and has no obligation to
do so. Accordingly, your failure to timely file a petition could nullify your
demand for appraisal.
At any time within 60 days after the effective date of the merger, any
stockholder who has demanded an appraisal has the right to withdraw the demand
and to accept the cash payment specified by the merger agreement for his or her
shares of Ambanc common stock. If a petition for appraisal is duly filed by a
stockholder and a copy of the petition is delivered to Hudson River, Hudson
River will then be
31
obligated within 20 days after receiving service of a copy of the petition to
provide the Chancery Court with a duly verified list containing the names and
addresses of all stockholders who have demanded an appraisal of their shares.
After notice to dissenting stockholders, the Chancery Court is empowered to
conduct a hearing upon the petition, to determine those stockholders who have
complied with Section 262 and who have become entitled to the appraisal rights
provided thereby. The Chancery Court may require the stockholders who have
demanded payment for their shares to submit their stock certificates to the
Register in Chancery for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such direction, the
court may dismiss the proceedings as to such stockholder.
After determination of the stockholders entitled to appraisal of their
shares of Ambanc common stock, the Chancery Court will appraise the shares,
determining their fair value exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a fair rate of
interest, if any. When the value is determined, the court will direct the
payment of such value, with interest thereon accrued during the pendency of the
proceeding if the Chancery Court so determines, to the stockholders entitled to
receive the same, upon surrender by such holders of the certificates
representing such shares.
In determining fair value, the Chancery Court is required to take into
account all relevant factors. You should be aware that the fair value of the
shares as determined under Section 262 could be more, the same, or less than the
value that you are entitled to receive pursuant to the merger agreement.
Costs of the appraisal proceeding may be imposed upon Hudson River and
the stockholders participating in the appraisal proceeding by the Chancery Court
as the court deems equitable in the circumstances. Upon the application of a
stockholder, the Chancery Court may order all or a portion of the expenses
incurred by any stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys' fees and the fees and
expenses of experts, to be charged pro rata against the value of all shares
entitled to appraisal.
Any stockholder who demands appraisal rights will not, after the
effective date, be entitled to vote shares subject to such demand for any
purpose or to receive payments of dividends or any other distribution with
respect to such shares, other than with respect to payment as of a record date
prior to the effective date; however, if no petition for appraisal is filed
within 120 days after the effective date, or if such stockholder delivers a
written withdrawal of his or her demand for appraisal and an acceptance of the
merger within 60 days after the effective date, then the right of such
stockholder to appraisal will cease and such stockholder will be entitled to
receive the cash payment for shares of his or her Ambanc common stock pursuant
to the merger agreement. Any withdrawal of a demand for appraisal made more than
60 days after the effective date of the merger may only be made with the written
approval of the surviving corporation.
In view of the complexity of Section 262, Ambanc stockholders who may
wish to dissent from the merger and pursue appraisal rights should consult their
legal advisors.
32
Federal Income Tax Consequences of the Merger to You
The exchange of our common stock for cash pursuant to the terms of the
merger agreement will be a taxable transaction for federal income tax purposes
under the Internal Revenue Code, and may also be a taxable transaction under
state, local and other tax laws. Similarly, any Ambanc stockholders who exercise
their dissenters' appraisal rights and receive cash in exchange for their shares
of Ambanc common stock will recognize gain or loss for federal income tax
purposes and may recognize gain or loss under state, local and other tax laws. A
stockholder of Ambanc will recognize gain or loss equal to the difference
between the amount of cash received by the stockholder pursuant to the merger
and the tax basis in the Ambanc common stock exchanged by such stockholder
pursuant to the merger.
Gain or loss must be determined separately for each block of Ambanc
common stock surrendered pursuant to the merger. For purposes of federal tax
law, a block consists of shares of Ambanc common stock acquired by the
stockholder at the same time and price. Gain or loss recognized by the
stockholder exchanging his or her Ambanc common stock pursuant to the merger or
pursuant to the exercise of dissenters' rights will be capital gain or loss if
such Ambanc common stock is a capital asset in the hands of the stockholder. If
the Ambanc common stock has been held for more than one year, the gain or loss
will be long-term. Capital gains recognized by an exchanging individual
stockholder generally will be subject to federal income tax at capital gain
rates applicable to the stockholder (up to a maximum of 39.6% for short-term
capital gains and 20% for long-term capital gains), and capital gains recognized
by an exchanging corporate stockholder generally will be subject to federal
income tax at a maximum rate of 35%.
Neither Hudson River nor Ambanc has requested or will request a ruling
from the Internal Revenue Service as to any of the tax effects to Ambanc's
stockholders of the transactions discussed in this proxy statement, and no
opinion of counsel has been or will be rendered to Ambanc's stockholders with
respect to any of the tax effects of the merger to stockholders.
The federal income tax discussion set forth above is based upon current
law and is intended for general information only. You are urged to consult your
tax advisor concerning the specific tax consequences of the merger to you,
including the applicability and effect of state, local or other tax laws and of
any proposed changes in those tax laws and the Internal Revenue Code.
Accounting Treatment of the Merger
The merger will be accounted for under the purchase method of
accounting. Under this method of accounting, Hudson River and Ambanc will be
treated as one company as of the date of the merger, and Hudson River will
record the fair value of Ambanc's assets (including intangible assets which
arise from either contractual or other legal rights or are separable) and
liabilities on its consolidated financial statements. Acquisition costs in
excess of the fair value of the net assets acquired will be recorded as
goodwill. Goodwill will not be amortized for financial accounting purposes, but
instead will be tested for impairment annually. Our results of operations will
be included in Hudson River's consolidated income statement after completion of
the merger.
Who Pays for What
All out-of-pocket costs and expenses incurred in connection with the
merger (including, but not limited to, counsel fees) will be paid by the party
incurring such costs and expenses.
33
CERTAIN RELATED AGREEMENTS
Plan of Liquidation
In connection with the merger, Ambanc will adopt a plan of liquidation
under which Ambanc, immediately after the completion of the merger, will be
liquidated and dissolved by transferring all of its assets and liabilities to
Hudson River.
Bank Merger Agreement
In connection with the merger, Mohawk Community Bank and Hudson River
will enter into a bank merger agreement under which Mohawk Community Bank and
Hudson River will merge, with Hudson River Bank being the surviving bank. The
merger agreement provides that if the bank merger is completed prior to March
17, 2002, then at, or immediately prior to consummation of the bank merger, Mr.
Lawrence B. Seidman, a current director of Ambanc and Chairman of the Board,
will be elected as a director of Hudson River for a term ending on the close of
business on March 17, 2002.
Voting Agreement
As an inducement for Hudson River to enter into the merger agreement,
each executive officer and director of Ambanc entered into a voting agreement
with Hudson River Bank & Trust Company. Pursuant to the voting agreement, our
executive officers and directors agreed to vote all of their shares of Ambanc
common stock owned, controlled or for which they possess voting power in favor
of the adoption of the merger agreement.
Standstill Agreement
As an inducement for Hudson River to enter into the merger agreement,
two directors of Ambanc, Mr. Seymour Holtzman and Mr. Lawrence B. Seidman, and
their respective affiliates, entered into an agreement prohibiting such persons
from acquiring any voting securities of Hudson River Bancorp, Inc., in excess of
a specified aggregate limitation, and such parties agreed that any Hudson River
Bancorp, Inc. securities currently owned or controlled by them will be voted
with the management of Hudson River Bancorp, Inc. The Standstill Agreements will
remain in effect for a period of two years for Mr. Seidman and for a period of
five years for Mr. Holtzman following the effective time of the merger. In
exchange for their mutual promises, Mr. Holtzman will receive an initial payment
of $49,000 and $35,000 per year for an additional four years thereafter, and Mr.
Seidman, $25,000 per year for a period of two years.
BENEFICIAL OWNERSHIP OF AMBANC COMMON STOCK
Stockholders of record as of the close of business on October 23, 2001
will be entitled to one vote for each share of our common stock then held. As of
that date, we had 4,496,178 shares of common stock issued and outstanding. The
following table sets forth information regarding the share ownership of:
* each holder of more than 5% of our outstanding common stock,
including our Employee Stock Ownership Plan,
* each member of our Board of Directors and each executive officer
who is not a director, and
34
* all of our and Mohawk Community Bank's directors and executive
officers as a group.
Percent of Shares
Amount and Nature of of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership(1) Outstanding
------------------------------------ ----------------------- -----------
Ambanc Holding Co., Inc.
Employee Stock Ownership Plan
11 Division Street
Amsterdam, New York 12010 384,709 (2) 8.6%
Seidman and Associates, L.L.C.
19 Veteri Place
Wayne, New Jersey 07470 306,553 (5) 6.8%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 355,200 (3) 7.9%
Jewelcor Management, Inc., et al.
100 N. Wilkes-Barre Boulevard
Wilkes-Barre, Pennsylvania 18702 329,797 (4) 7.3%
Daniel J. Greco, Director 20,606 (6) *
John M. Lisicki, President,
Chief Executive Officer and Director 78,540 (7) 1.7%
Charles S. Pedersen, Director 28,948 (8) *
John A. Tesiero, Jr., Director 30,062 (9) *
James J. Bettini, Sr, Director 4,814 (10) *
Seymour Holtzman, Director 329,797 (11) 7.3%
Allan R. Lyons, Director 4,013 *
Charles E. Wright, Director 4,914 (12) *
William L. Petrosino, Director 62,768 (13) 1.4%
John J. Daly, Director 12,673 (14) *
Marvin R. LeRoy, Jr., Director 22,490 (15) *
Lawrence B. Seidman, Director 306,553 (16) 6.8%
Ronald S. Tecler, Director 33,299 (17) *
Benjamin Ziskin, Senior Vice President 41,205 (18) *
Thomas Nachod, Senior Vice President 4,792 (19) *
James J. Alescio, Senior Vice President 33,888 (20) *
Directors and executive officers of the 1,019,362 (21) 21.7%
Company as a group (16 persons)
-------------------
* An asterisk indicates ownership of less than 1%.
(1) The nature of beneficial ownership for shares reported in this column is
sole voting and dispositive power, except as otherwise noted in these
footnotes. Included in the shares beneficially owned by the named
individuals are options to purchase shares of common stock, which are
currently exercisable or which will become exercisable within 60 days of
the Voting Record Date, as follows: Mr. Lisicki - 43,913 shares; Messrs.
Greco, Tecler and Tesiero - 9,282 shares; Messrs. LeRoy and Pedersen -
19,556 shares; Mr. Holtzman - 11,613 shares; Messrs. Daly, Petrosino,
Wright, Lyons & Bettini - 1,500 shares; Mr. Seidman -- 16,613 shares; Mr.
Ziskin - 27,405 shares; Mr. Nachod - 2,500 shares; and Mr. Alescio - 19,622
shares.
35
(footnotes continued from previous page)
(2) The amount reported represents shares of common stock held by the Ambanc
Holding Co., Inc. Employee Stock Ownership Plan (the "ESOP"). As of the
Voting Record Date, 193,780 shares of common stock under the ESOP had been
allocated to accounts of participants. RS Group Trust Company, as the
trustee of the ESOP, may be deemed to beneficially own the shares held by
the ESOP which have not been allocated to the accounts of participants or
which have been allocated but are not voted by the participants.
Participants in the ESOP have the right to direct the voting of shares
allocated to their accounts. Unallocated shares held by the ESOP are voted
by the plan trustee in the same manner that the plan trustee is directed to
vote by the majority of the plan participants who directed the plan trustee
as to the manner of voting the shares allocated to their plan accounts.
(3) As reported on a Schedule 13G filed with the Securities and Exchange
Commission (the "SEC") on February 2, 2001. The filer reports sole voting
and dispositive power with respect to all shares but disclaims beneficial
ownership of all shares of common stock.
(4) As reported by Jewelcor Management, Inc. ("JMI") and the other members of a
group formed with JMI under Section 13(d) of the Securities Exchange Act of
1934 based on an amended Schedule 13D filed with the SEC on September 20,
2000 and a Form 4 filed in August, 2001. JMI reported sole voting and
dispositive power over 308,440 shares. The other members of the group
reported beneficial ownership as follows: Mr. Seymour Holtzman, a director
of the Company and a member of this group: shared voting and dispositive
power over 5,980 shares; Mr. Holtzman's wife: none; Allison Holtzman
Garcia, Mr. Holtzman's daughter: sole voting and dispositive power over
1,535 shares; Custodial Account f/b/o Allison Holtzman Garcia ("AHG
Custodial Account"): sole voting and dispositive power over 1,374 shares;
Trust f/b/o Steven Holtzman, Mr. Holtzman's son ("SH Trust"): sole voting
and dispositive power over 160 shares; Custodial Account f/b/o Olivia
Garcia, Mr. Holtzman's granddaughter ("OG Custodial Account"), sole voting
and dispositive power over 160 shares; Custodial Account f/b/o Chelsea
Holtzman, Mr. Holtzman's granddaughter ("CH Custodial Account"): sole
voting and dispositive power over 535 shares; S.H. Holdings, Inc.: none;
Jewelcor: none.
(5) As reported by Seidman and Associates, L.L.C. and the other members of a
group formed with Seidman and Associates, L.L.C. under Section 13(d) of the
Securities Exchange Act of 1934 based on a Schedule 13D filed with the SEC
on August 25, 2000 and a Form 4 filed in August, 2001. Seidman and
Associates, L.L.C. reported sole voting and dispositive power over 110,497
shares. The other members of the group reported beneficial ownership as
follows: Mr. Lawrence B. Seidman, a director of the Company and a member of
this group: sole voting and dispositive power over 289,940 shares; Seidman
Investment Partnership, L.P.: sole voting and investment power over 31,670
shares; Seidman Investment Partnership II, L.P.: sole voting and investment
power over 36,750 shares; Kerrimatt, L.P.: sole voting and investment power
over 37,500 shares; Federal Holdings, L.L.C.: sole voting and investment
power over 30,250 shares; Pollack Investment Partnership, L.P.: sole voting
and investment power over 12,000 shares; discretionary clients: sole voting
and investment power over 25,400 shares.
(6) Includes shared voting and dispositive power over 7,134 shares.
(7) Includes shared voting and dispositive power over 27,994 shares.
(8) Includes shared voting and dispositive power over 2,500 shares.
(9) Includes shared voting and dispositive power over 5,834 shares.
(10) Includes shared voting and dispositive power over 600 shares.
(11) For detailed information regarding Mr. Holtzman's ownership, see footnote
(4).
(12) Includes shared voting and dispositive power over 700 shares.
(13) Includes shared voting and dispositive power over 23,400 shares.
(14) Includes shared voting and dispositive power over 2,611 shares.
(15) Includes shared voting and dispositive power over 1,020 shares.
(16) For detailed information regarding Mr. Seidman's ownership, see footnote
(5).
(17) Includes shared voting and dispositive power over 2,140 shares.
(18) Includes shared voting and dispositive power over 13,800 shares.
(19) Includes shared voting and dispositive power over 2,292 shares.
(20) Includes shared voting and dispositive power over 14,266 shares.
(21) This amount includes shares held directly, as well as shares held jointly
with family members, shares held in retirement accounts, held in a
fiduciary capacity, held by certain of the group members' families, or held
by trusts of which the group member is a trustee or substantial
beneficiary, with respect to which shares the group member may be deemed to
have sole or shared voting and/or investment powers. This amount also
includes options to purchase 196,124 shares of common stock granted to
group members which are currently exercisable or which will become
exercisable within 60 days of the Voting Record Date. In addition, this
amount includes the 329,797 shares owned by Mr. Holtzman and the other
members of his group described in footnote (4) and the 306,553 shares owned
by Mr. Seidman and the other members of his group described in footnote
(5).
36
STOCKHOLDER PROPOSALS
If the merger is not consummated prior to the next regularly scheduled
annual meeting of our stockholders, any proposal which a stockholder wishes to
be eligible to be included in our proxy materials for the next annual meeting of
stockholders must be received at our main office located at 11 Division Street,
Amsterdam, New York 12010-4303, Attention: Robert Kelly, Secretary, no later
than December 19, 2001. Otherwise, any stockholder proposal to take action at
the next annual meeting requires the stockholder to provide notice to us which
must be received at our main office located at 11 Division Street, Amsterdam,
New York, 12010-4303, not less than sixty (60) days prior to the anniversary
date of the preceding year's annual meeting, or March 19, 2002. The
stockholder's notice must include certain information as specified in our
bylaws. Nothing in this paragraph shall be deemed to require us to include in
our proxy statement or the proxy relating to any annual meeting any stockholder
proposal which does not meet all of the requirements for inclusion established
by the SEC in effect at the time such proposal is received. In addition, all
stockholder proposals must comply with our bylaws and Delaware law.
OTHER MATTERS
Each proxy solicited also confers discretionary authority on our Board
of Directors to vote the proxy with respect to matters incident to the conduct
of the meeting and upon such other matters as may properly come before the
special meeting. Our Board of Directors is not aware of any business to come
before the special meeting other than those matters described above in this
proxy statement. However, if any other matter should properly come before the
special meeting, it is intended that proxy holders will act in accordance with
their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Robert Kelly
----------------------------------
Robert Kelly
Secretary
Amsterdam, New York
November 2, 2001
37
APPENDIX A
AGREEMENT AND PLAN OF MERGER
between
HUDSON RIVER BANK & TRUST COMPANY
and
AMBANC HOLDING CO., INC.
dated as of September 4, 2001
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
ARTICLE II
THE TRANSACTIONS
2.1 The Corporate Merger.....................................................................A-7
2.2 Effective Time; Closing..................................................................A-8
2.3 Treatment of Capital Stock...............................................................A-8
2.4 Shareholder Rights; Stock Transfers......................................................A-8
2.5 Cancellation of Seller Options and Seller Restricted Stock...............................A-8
2.6 Exchange Procedures......................................................................A-9
2.7 Dissenting Shares.......................................................................A-10
2.8 Liquidation and Bank Merger.............................................................A-11
2.9 Additional Actions......................................................................A-11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Capital Structure.......................................................................A-11
3.2 Organization, Standing and Authority of Seller..........................................A-11
3.3 Ownership of Seller Subsidiaries........................................................A-12
3.4 Organization, Standing and Authority of Seller Subsidiaries.............................A-12
3.5 Authorized and Effective Agreement......................................................A-12
3.6 Securities Documents and Regulatory Reports.............................................A-13
3.7 Financial Statements....................................................................A-14
3.8 Material Adverse Change.................................................................A-14
3.9 Environmental Matters...................................................................A-14
3.10 Tax Matters.............................................................................A-15
3.11 Legal Proceedings. ....................................................................A-16
3.12 Compliance with Laws....................................................................A-16
3.13 Certain Information.....................................................................A-16
3.14 Employee Benefit Plans..................................................................A-17
3.15 Certain Contracts.......................................................................A-18
3.16 Brokers and Finders.....................................................................A-19
3.17 Insurance...............................................................................A-19
3.18 Properties..............................................................................A-19
3.19 Labor...................................................................................A-19
3.20 Allowance for Loan Losses...............................................................A-19
3.21 Material Interests of Certain Persons...................................................A-20
A-i
3.22 Fairness Opinion........................................................................A-20
3.23 No Undisclosed Liabilities..............................................................A-20
3.24 Loan Portfolio..........................................................................A-20
3.25 Investment Portfolio....................................................................A-21
3.26 Interest Rate Risk Management Instruments...............................................A-21
3.27 Interim Events..........................................................................A-21
3.28 Indemnification.........................................................................A-21
3.29 Disclosures.............................................................................A-21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization, Standing and Authority of Buyer...........................................A-21
4.2 Authorized and Effective Agreement......................................................A-22
4.3 Securities Documents and Regulatory Reports.............................................A-23
4.4 Financial Statements....................................................................A-23
4.5 Material Adverse Change.................................................................A-23
4.6 Legal Proceedings.......................................................................A-23
4.7 Certain Information.....................................................................A-23
4.8 Brokers and Finders.....................................................................A-24
4.9 Financial Resources.....................................................................A-24
4.10 Disclosures.............................................................................A-24
ARTICLE V
COVENANTS
5.1 Reasonable Best Efforts.................................................................A-24
5.2 Shareholders Meeting....................................................................A-24
5.3 Regulatory Matters......................................................................A-24
5.4 Investigation and Confidentiality.......................................................A-25
5.5 Press Releases..........................................................................A-26
5.6 Business of the Parties.................................................................A-26
5.7 Certain Actions.........................................................................A-29
5.8 Current Information.....................................................................A-30
5.9 Indemnification; Insurance..............................................................A-30
5.10 Early Completion of Bank Merger.........................................................A-31
5.11 Employees and Employee Benefit Plans....................................................A-31
5.12 Organization of Merger Sub..............................................................A-33
5.13 Conforming Entries. ...................................................................A-33
5.14 Integration of Policies.................................................................A-34
5.15 Disclosure Supplements..................................................................A-34
5.16 Failure to Fulfill Conditions...........................................................A-34
5.17 Environmental Reports...................................................................A-34
5.18 Litigation Matters .....................................................................A-35
5.19 Liquidated Damages .....................................................................A-35
A-ii
5.20 Sale of Loans by Seller Bank ...........................................................A-36
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - The Parties......................................................A-36
6.2 Conditions Precedent - Seller...........................................................A-37
6.3 Conditions Precedent - Buyer............................................................A-37
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination.............................................................................A-38
7.2 Effect of Termination...................................................................A-39
7.3 Survival of Representations, Warranties and Covenants...................................A-39
7.4 Waiver..................................................................................A-39
7.5 Amendment or Supplement.................................................................A-39
7.6 Specific Performance....................................................................A-39
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses. .............................................................................A-40
8.2 Entire Agreement........................................................................A-40
8.3 No Assignment...........................................................................A-40
8.4 Notices.................................................................................A-40
8.5 Alternative Structure...................................................................A-41
8.6 Interpretation..........................................................................A-41
8.7 Counterparts............................................................................A-41
8.8 Governing Law...........................................................................A-41
8.9 Severability............................................................................A-41
Exhibit A Form of Voting Agreement
Exhibit B Form of Standstill Agreement
A-iii
AGREEMENT AND PLAN OF MERGER
WHEREAS, the Boards of Directors of the Parties (as such term is
defined in Article I hereof) have determined to consummate certain business
combination transactions subject to the terms and conditions set forth herein;
and
WHEREAS, as a material inducement for Buyer to enter into this
Agreement, each of the executive officers and directors of Seller and each of
their respective affiliates have entered into a Voting Agreement (as such term
is defined in Article I hereof) pursuant to which each such person has agreed to
vote all of the shares of Seller Common Stock owned, controlled or for which
such person has voting power in favor of the Corporate Merger (as such term is
defined in Article I herein) and the adoption of this Agreement; and
WHEREAS, as a material inducement for Buyer to enter into this
Agreement Seymour Holtzman and Lawrence Seidman and their affiliates have
entered into the Standstill Agreements (as such term is defined in Article I
hereof) with Buyer; and
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements of the Parties contained
herein, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings ascribed to them for all
purposes of this Agreement.
"Acquisition Proposal" means a proposal to engage in, or a public
announcement to engage in, or a filing with the SEC or any other Governmental
Entity with respect to, any of the following: (a) a merger, consolidation or any
similar transaction involving Seller or Seller Bank (other than the
Transactions), (b) a purchase, lease or other acquisition of all or a
substantial portion of the assets of Seller or Seller Bank, (c) a purchase or
other acquisition of "beneficial ownership" by any "person" or "group" (as such
terms are defined in Section 13(d)(3) of the Exchange Act) (including by way of
merger, consolidation, share exchange, or otherwise) which would cause such
person or group to become the beneficial owner of securities representing more
than 19.9% of the voting power of Seller, (d) a tender or exchange offer to
acquire securities representing more than 19.9% of the voting power of Seller or
(e) a public proxy or consent solicitation made to the shareholders of Seller
seeking proxies in opposition to this Agreement or the Corporate Merger.
"Agreement" means this Agreement and Plan of Merger, as the same may be
modified or amended in accordance with the terms hereof.
"Bank Merger" means the merger of Seller Bank into Buyer.
A-1
"Buyer" means Hudson River Bank & Trust Company, a New York chartered
savings institution and wholly owned subsidiary of Parent.
"Buyer's Proposal" has the meaning set forth in Section Section 5.7(b).
"Cause" means termination because of the employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties or willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses).
"Certificate" means any certificate which prior to the Effective Time
represented shares of Seller Common Stock other than certificates for
Seller-Owned Shares and certificates for Seller Restricted Stock.
"Certificate of Merger" means the certificate of merger to be filed
with the Delaware Secretary of State with respect to the Corporate Merger.
"Closing" means the closing of the Corporate Merger at a time and place
reasonably selected by Buyer following the satisfaction or waiver of all
conditions to the Corporate Merger.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Corporate Merger" means the merger of Merger Sub into Seller, with
Seller as the surviving corporation.
"CRA" means the Community Reinvestment Act.
"Department" means the New York State Department of Banking.
"DGCL" means the Delaware General Corporation Law, as amended.
"Dissenting Shares" means any shares of Seller Common Stock whose
holder becomes entitled to fair value under the DGCL.
"DOJ" means the United States Department of Justice.
"Effective Time" means the time of the filing of the Certificate of
Merger, or such later time as may be specified in the Certificate of Merger.
"Environmental Claim" means any written notice from any Governmental
Entity or third party alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or
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penalties) arising out of, based on, or resulting from the presence, or release
into the environment, of any Materials of Environmental Concern.
"Environmental Laws" shall mean any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Governmental Entity relating to (a) the protection, preservation or restoration
of the environment (including air, water vapor, surface water, groundwater,
drinking water supply, surface soil, subsurface soil, plant and animal life or
any other natural resource), and/or (b) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of Materials of Environment Concern. The term Environmental Law
includes (i) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. ss.9601, et seq; the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. ss.6901, et seq; the Clean Air Act, as
amended, 42 U.S.C. ss.7401, et seq; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. ss.1251, et seq; the Toxic Substances Control Act, as
amended, 15 U.S.C. ss.9601, et seq; the Emergency Planning and Community Right
to Know Act, 42 U.S.C. ss.1101, et seq; the Safe Drinking Water Act, 42 U.S.C.
ss.300f, et seq; and all comparable state and local laws, and (ii) any common
law (including common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Materials of Environmental
Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" means Registrar & Transfer Company.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
thereto.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"FHLB" shall mean the Federal Home Loan Bank of New York.
"GAAP" means generally accepted accounting principles.
"Governmental Entity" means any federal or state court, administrative
agency or commission or other governmental authority or instrumentality.
"HOLA" means the Home Owners' Loan Act, as amended.
"include" means "include without limitation."
"Indemnified Parties" has the meaning set forth in Section 5.9(a).
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"Insider Loans" means loans from Seller or any Seller Subsidiary to any
officer, director or employee of Seller, any Seller Subsidiary or any associate
or related interest of any such person.
"IRS" means the Internal Revenue Service or any successor thereto.
"Liquidation" means the liquidation and dissolution of Seller pursuant
to which all of the assets and liabilities of Seller shall be transferred to
Buyer.
"MAE Qualification" shall mean except for any failures,
non-compliances, facts, events or circumstances, which when aggregated with all
other failures, non-compliances, facts, events or circumstances would not have a
Material Adverse Effect.
"Material Adverse Effect" means, (a) in the case of Seller, any effect
that is material and adverse to the condition (financial or otherwise), results
of operations or business of Seller and its Subsidiaries, taken as a whole, or
that materially impairs the ability of Seller or Seller Bank to consummate any
of the Transactions, provided, however, that a Material Adverse Effect shall not
be deemed to include the impact of (i) changes in laws and regulations or
interpretations thereof that are generally applicable to the banking or savings
institution industries, (ii) changes in GAAP that are generally applicable to
the banking or savings institution industries, (iii) expenses incurred in
connection with this Agreement and the Transactions, including payments to be
made pursuant to Previously Disclosed employment and severance agreements and
the financial reporting expense associated with the retirement of the Seller
ESOP loan, (iv) actions or omissions of Seller or Seller Bank taken with the
prior informed written consent of Buyer in contemplation of the Transactions or
(v) changes attributable to or resulting from changes in general economic
conditions generally affecting financial institutions, including changes in the
prevailing level of interest rates; and (b) in the case of Buyer, any effect
that materially impairs the ability of Buyer to make payment at the Effective
Time of the aggregate Merger Consideration or otherwise materially impairs the
ability of Buyer to consummate any of the Transactions.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Merger Consideration" shall mean $21.50 in cash without interest for
each share of Seller Common Stock outstanding immediately prior to the Effective
Time (but excluding Dissenting Shares and Seller-Owned Shares).
"Merger Sub" means a Delaware corporation to be organized as a first
tier, transitory Subsidiary of Buyer.
"Merger Sub Common Stock" means the common stock of Merger Sub.
"NASD" means the National Association of Securities Dealers, Inc.
"New Merger Consideration" has the meaning set forth in Section 5.7(b).
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"NYBL" means the New York Banking Law.
"OTS" means the Office of Thrift Supervision of the U.S. Department of
the Treasury or any successor thereto.
"Parent" means Hudson River Bancorp, Inc., a Delaware corporation.
"Parent Financial Statements" means the consolidated balance sheets
(including related notes and schedules, if any) of Parent as of June 30, 2001
and 2000 and the consolidated income statements and statements of changes in
equity and cash flows (including related notes and schedules, if any) of Parent
for each of the three years ended June 30, 2001, 2000 and 1999, as filed by
Parent in its Securities Documents.
"Parties" means Buyer and Seller.
"Party" means either Buyer or Seller.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Plan of Bank Merger" means the plan of merger to be entered into by
Seller Bank and Buyer to effectuate the Bank Merger.
"Previously Disclosed" means disclosed in a disclosure schedule
delivered prior to the date hereof by the disclosing Party to the other Party
specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein.
"Proxy Statement" means the proxy statement to be delivered to
shareholders of Seller in connection with the solicitation of their adoption of
this Agreement.
"Rights" means warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Documents" means all reports, offering circulars, proxy
statements, registration statements and all similar documents filed, or required
to be filed, pursuant to the Securities Laws.
"Securities Laws" means the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the SEC promulgated thereunder.
"Seller" means Ambanc Holding Co., Inc., a Delaware corporation.
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"Seller Bank" means Mohawk Community Bank , a federally chartered
savings bank and wholly owned subsidiary of Seller.
"Seller Common Stock" means the common stock, par value $0.01 per
share, of Seller.
"Seller Defined Benefit Plan" means any Seller Employee Plan
constituting a "defined benefit plan" within the meaning of Section 3(35) of
ERISA.
"Seller Employee Plans" means all stock option, employee stock purchase
and stock bonus plans, qualified pension, stock ownership or profit-sharing
plans, any deferred compensation, consultant, bonus or group insurance contract
or any other incentive, health and welfare or employee benefit plan or agreement
maintained for the benefit of employees or former employees of Seller or any
Seller Subsidiary, whether written or oral.
"Seller ESOP" means the employee stock ownership plan of Seller, as in
effect as of the date hereof.
"Seller Financial Statements" means (a) the consolidated balance sheets
(including related notes and schedules, if any) of Seller as of December 31,
2000 and 1999 and the consolidated statements of income, changes in
stockholders' equity and cash flows (including related notes and schedules, if
any) of Seller for each of the three years ended December 31, 2000, 1999 and
1998 as filed by Seller in its Securities Documents, and (b) the consolidated
balance sheets of Seller (including related notes and schedules, if any) and the
consolidated statements of income, changes in stockholders' equity and cash
flows (including related notes and schedules, if any) of Seller included in the
Securities Documents filed by Seller with respect to the periods ended
subsequent to December 31, 2000.
"Seller Options" means options to purchase shares of Seller Common
Stock issued pursuant to Seller's 1997 Stock Option and Incentive Plan or
pursuant to any other stock option plan of an entity previously acquired by
Seller.
"Seller-Owned Shares" means any shares of Seller Common Stock which are
owned beneficially or of record by any Party or any Subsidiary of a Party
immediately prior to the Effective Time, other than shares held in a fiduciary
capacity for the benefit of third parties (including under the Seller ESOP and
other Seller Employee Plans) or as a result of debts previously contracted.
"Seller Preferred Stock" means the shares of preferred stock, par value
$0.01 per share, of Seller.
"Seller Restricted Stock" means outstanding shares of Seller Common
Stock subject to restrictions pursuant to any restricted stock plan.
"Standstill Agreements" are the agreements, substantially in the form
of Exhibit B, to be entered into by Seymour Holtzman and Lawrence Seidman and
their respective affiliates with Buyer providing for, among other things, that
none of Seymour Holtzman, Lawrence Seidman or any of
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their respective affiliates shall directly or indirectly for a stated period of
time acquire any voting securities (or securities which are convertible to
voting securities) of Parent in excess of a specified aggregate limitation and
all voting securities of Parent owned or controlled by them or any of them shall
be voted with management of Parent.
"Superior Offer" means any bona fide proposal, including a tender
offer, made by a third party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the
outstanding Seller Common Stock or all or substantially all the assets of Seller
and provides consideration to Seller's shareholders which the Board of Directors
of Seller determines in its good faith judgment (based on the advice of its
financial advisor) to be more favorable than the Merger Consideration and for
which third-party financing, to the extent required, is then firmly committed.
"Superintendent" means the Superintendent of the Department.
"Subsidiary" and "Significant Subsidiary" have the meanings set forth
in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" means Seller after the Corporate Merger.
"Surviving Corporation Common Stock" means the shares of common stock
of the Surviving Corporation.
"Transactions" means the Corporate Merger, Liquidation and Bank Merger.
"Voting Agreement" means that certain agreement entered into between
Buyer and each of the executive officers and directors of Seller and each of
their respective affiliates on the date hereof in the form of Exhibit A hereto.
ARTICLE II
THE TRANSACTIONS
2.1 The Corporate Merger.
(a) Subject to the terms and conditions of this Agreement, at
the Effective Time, Merger Sub shall be merged into Seller in accordance with
the provisions of Section 251 of the DGCL, and the separate corporate existence
of Merger Sub shall cease. Seller shall be the Surviving Corporation of the
Corporate Merger, and shall continue its corporate existence under the laws of
the State of Delaware. The name of the Surviving Corporation shall be as stated
in the Certificate of Incorporation of Seller immediately prior to the Effective
Time.
(b) The Certificate of Incorporation and Bylaws of Seller as
in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Corporation.
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(c) The directors and officers of Merger Sub immediately prior
to the Effective Time shall be the directors and officers of the Surviving
Corporation.
2.2 Effective Time; Closing. The Corporate Merger shall become
effective at the Effective Time. The Certificate of Merger shall be properly
executed and filed with the Secretary of State of Delaware on the Closing Date.
2.3 Treatment of Capital Stock. At the Effective Time, automatically by
virtue of the Corporate Merger and without any action on the part of any Party
or any shareholder:
(a) each outstanding share of Merger Sub Common Stock shall
become an outstanding share of Surviving Corporation Common Stock;
(b) each outstanding or treasury share of Buyer capital stock
shall be unchanged and shall continue as an outstanding or treasury share of
Buyer capital stock;
(c) each share of Seller Common Stock issued and outstanding
immediately prior to the Effective Time (other than Dissenting Shares and
Seller-Owned Shares) shall be converted into the right to receive the Merger
Consideration; and
(d) all Seller-Owned Shares shall be cancelled and retired
without consideration or conversion.
2.4 Shareholder Rights; Stock Transfers. At the Effective Time, holders
of Seller Common Stock shall cease to be and shall have no rights as
shareholders of Seller, other than such rights as they may have under the DGCL.
After the Effective Time, there shall be no transfers on the stock transfer
books of Seller or the Surviving Corporation of shares of Seller Common Stock
and if Certificates are presented for transfer after the Effective Time, they
shall be delivered to Buyer or the Exchange Agent for cancellation against
delivery of the Merger Consideration. No interest shall be paid on the Merger
Consideration.
2.5 Cancellation of Seller Options and Seller Restricted Stock.
(a) Each Seller Option outstanding on the date hereof and
remaining outstanding immediately prior to the Effective Time, whether or not
the option is then exercisable, shall be converted into the right to receive a
cancellation payment in an amount equal to the product of (i) the number of
shares of Seller Common Stock subject to such option immediately prior to the
Effective Time and (ii) the excess, if any, of the Merger Consideration over the
exercise price per share of such option, net of any cash which must be withheld
under federal and state income and employment tax requirements. Such cash
payments shall be made by Seller not later than the Effective Time in
consideration for, and shall result in, the settlement and cancellation of all
such Seller Options. As a condition to the receipt of a cash payment in
cancellation of options, each option holder shall execute and deliver a
cancellation agreement to Seller in form and substance reasonably satisfactory
to Buyer.
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(b) Each share of Seller Restricted Stock outstanding
immediately prior to the Effective Time shall be canceled and exchanged for a
payment to made to the recipient or holder thereof by the Seller Bank not later
than the Effective Time in an amount equal to the Merger Consideration, less any
cash which must be withheld under federal and state income and employment tax
requirements; provided that such recipient or holder shall deliver to the Seller
Bank a cancellation agreement in form and substance reasonably satisfactory to
the Buyer prior to receipt of such payment.
2.6 Exchange Procedures.
(a) No later than five business days following the Effective
Time, Buyer shall cause the Exchange Agent to mail or make available to each
holder of record of any Certificate a notice and letter of transmittal
disclosing the effectiveness of the Corporate Merger and the procedure for
exchanging Certificates for the Merger Consideration. Such letter of transmittal
shall specify that delivery shall be effected and risk of loss and title shall
pass only upon proper delivery of Certificates to the Exchange Agent.
(b) At or prior to the Effective Time, or at such other time
or times as the Exchange Agent may otherwise request, Buyer shall deliver to the
Exchange Agent for the benefit of the holders of Certificates (other than the
holders of Dissenting Shares) an amount of cash for timely payment of the
aggregate Merger Consideration to such holders of Certificates.
(c) Each holder of a Certificate (other than holders of
Dissenting Shares) who surrenders such Certificate to the Exchange Agent will,
upon acceptance thereof by the Exchange Agent, be entitled to the Merger
Consideration to be paid within seven business days of acceptance by the
Exchange Agent. The Exchange Agent shall accept Certificates upon compliance
with such reasonable terms and conditions as the Exchange Agent may impose to
effect an orderly exchange in accordance with normal exchange practices. Each
Certificate which is not surrendered to the Exchange Agent shall, except as
otherwise herein provided, evidence ownership of only the right to receive the
Merger Consideration without interest.
(d) The Exchange Agent shall not be obligated to deliver the
Merger Consideration until the holder surrenders a Certificate as provided in
this Section 2.6, or, in default thereof, an appropriate affidavit of loss and
indemnity agreement and/or a bond as may be required in each case by the
Exchange Agent. If any check is to be issued in a name other than that in which
the Certificate is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed or accompanied by
an executed form of assignment separate from the Certificate and otherwise in
proper form for transfer and that the person requesting such exchange pay to the
Exchange Agent any transfer or other tax required by reason of the issuance of a
check in any name other than that of the registered holder of the Certificate
surrendered or otherwise establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(e) Any portion of the cash delivered to the Exchange Agent by
Buyer pursuant to Section 2.6(b) that remains unclaimed by the shareholders of
Seller for six months after the
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Closing Date shall be delivered by the Exchange Agent to Buyer. Any shareholders
of Seller who have not theretofore complied with Section 2.6(c) shall thereafter
look only to Buyer for the Merger Consideration. If Certificates are not
surrendered or the payment for them is not claimed prior to the date on which
such payment would otherwise escheat to or become the property of any
Governmental Entity, the unclaimed items shall, to the extent permitted by
abandoned property and any other applicable law, become the property of Buyer
(and to the extent not in its possession shall be delivered to it), free and
clear of all claims or interest of any person previously entitled to such
property. Neither the Exchange Agent nor any Party shall be liable to any holder
of Seller Common Stock represented by any Certificate for any consideration paid
to a public official pursuant to applicable abandoned property, escheat or
similar laws. Buyer and the Exchange Agent shall be entitled to rely upon the
stock transfer books of Seller to establish the identity of those persons
entitled to receive the Merger Consideration, which books shall be conclusive
with respect thereto. In the event of a dispute with respect to ownership of
Seller Common Stock represented by any Certificate, Buyer and the Exchange Agent
shall be entitled to deposit any Merger Consideration represented thereby in
escrow with an independent third party and thereafter be relieved with respect
to any claims thereto.
(f) The Exchange Agent or Buyer shall be entitled to deduct
and withhold from consideration otherwise payable pursuant to this Agreement to
any holder of Certificates, such amounts as it is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by the Exchange Agent or Buyer, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Certificates in respect of which such deduction and withholding was made.
2.7 Dissenting Shares.
(a) Any holders of Dissenting Shares shall be entitled to
payment for such shares only to the extent permitted by and in accordance with
the provisions of the DGCL; provided, however, that if, in accordance with the
DGCL, any holder of Dissenting Shares shall forfeit such right to payment of the
fair value of such shares, such shares shall thereupon be deemed to have been
converted into and to have become exchangeable for, as of the Effective Time,
the right to receive the Merger Consideration without interest from Buyer.
Dissenting Shares shall not, after the Effective Time, be entitled to vote for
any purpose or receive any dividends or other distributions and shall be
entitled only to such rights as are afforded in respect of Dissenting Shares
pursuant to the DGCL.
(b) Seller shall give Buyer (i) prompt notice of any written
objections to the Corporate Merger and any written demands for the payment of
the fair value of any shares, withdrawals of such demands, and any other
instruments served pursuant to the DGCL received by Seller and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
such demands under the DGCL. Seller shall not voluntarily make any payment with
respect to any demands for payment of fair value and shall not, except with the
prior written consent of Buyer, settle or offer to settle any such demands.
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2.8 Liquidation and Bank Merger. Immediately after the Effective Time
the Board of Directors of Buyer shall approve the Liquidation and shall take all
necessary action to consummate the Liquidation. Immediately after consummation
of the Liquidation, Buyer shall cause its Board of Directors and the Boards of
Directors of Seller Bank to approve the Plan of Bank Merger and to take all
necessary action to cause the Bank Merger to become effective.
2.9 Additional Actions. If, at any time after the Effective Time, Buyer
shall consider that any further assignments or assurances in law or any other
acts are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in Buyer its right, title or interest in, to or under any of the
rights, properties or assets of Seller or Seller Bank acquired or to be acquired
by Buyer as a result of, or in connection with, the Transactions, or (ii)
otherwise carry out the purposes of this Agreement, Seller, Seller Bank and
their proper officers and directors shall be deemed to have granted to Buyer an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper to
vest, perfect or confirm title to and possession of such rights, properties or
assets in Buyer and otherwise to carry out the purposes of this Agreement; and
the proper officers and directors of Buyer are fully authorized in the name of
Seller, Seller Bank or otherwise to take any and all such action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows, except as
Previously Disclosed:
3.1 Capital Structure. The authorized capital stock of Seller consists
of fifteen million shares of Seller Common Stock and five million shares of
Seller Preferred Stock. As of the date hereof, 4,436,178 shares of Seller Common
Stock are outstanding including shares of Seller Restricted Stock, 996,067
shares of Seller Common Stock are held in treasury, and no shares of Seller
Preferred Stock have been issued. All outstanding shares of Seller Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable, and none of the outstanding shares of Seller Common Stock has
been issued in violation of the preemptive rights of any person, firm or entity.
Except for (a) Seller Options to acquire not more than 608,348 shares of Seller
Common Stock, a schedule of which has been Previously Disclosed that includes
the name of each optionee, the number of Seller Options held by each optionee,
the vesting date of each Seller Option and the exercise price thereof, and (b)
6,975 shares of Seller Restricted Stock a schedule of which has been Previously
Disclosed, there are no Rights authorized, issued or outstanding with respect to
the capital stock of Seller.
3.2 Organization, Standing and Authority of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority to own and
lease all of its properties and assets and to carry on its business as now
conducted, and Seller is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which its ownership or leasing of property
or the conduct of its business requires such licensing or qualification. Seller
is a unitary savings and loan holding company under the HOLA and the regulations
of the OTS thereunder. Seller has heretofore delivered
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to Buyer true and complete copies of the Certificate of Incorporation and Bylaws
of Seller as in effect as of the date hereof.
3.3 Ownership of Seller Subsidiaries. Seller has Previously Disclosed
the name, jurisdiction of incorporation and percentage ownership of each direct
or indirect Seller Subsidiary and has identified Seller Bank as its only
Significant Subsidiary. Except for (a) capital stock of Seller Subsidiaries, (b)
securities and other interests held in a fiduciary capacity and beneficially
owned by third parties or taken in consideration of debts previously contracted
and (c) securities and other interests which are Previously Disclosed, neither
Seller nor any Seller Subsidiary owns or has the right to acquire, directly or
indirectly, any outstanding capital stock or other voting securities or
ownership interests of any corporation, bank, savings association, partnership,
joint venture or other organization, other than investment securities
representing not more than 5% of any entity. The outstanding shares of capital
stock or other ownership interests of each Seller Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, and are
directly owned by Seller free and clear of all liens, claims, encumbrances,
charges, pledges, restrictions or rights of third parties of any kind
whatsoever. No rights are authorized, issued or outstanding with respect to the
capital stock or other ownership interests of Seller Subsidiaries and there are
no agreements, understandings or commitments relating to the right of Seller or
any Seller Subsidiary to vote or to dispose of such capital stock or other
ownership interests.
3.4 Organization, Standing and Authority of Seller Subsidiaries. Each
of the Seller Subsidiaries is a savings bank, corporation or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized with full power and authority to own and
lease all of its properties and assets and to carry on its business as now
conducted, and each of the Seller Subsidiaries is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which its ownership
or leasing of property or the conduct of its business requires such licensing or
qualification. The deposit accounts of Seller Bank are insured by the FDIC to
the maximum extent permitted by the FDIA and Seller Bank has paid all deposit
insurance premiums and assessments required by the FDIA and the regulations
thereunder. Seller has heretofore delivered to Buyer true and complete copies of
the Charter and Bylaws of Seller Bank as in effect as of the date hereof.
3.5 Authorized and Effective Agreement.
(a) Seller has all requisite power and authority to enter into
this Agreement and (subject to receipt of all necessary approvals of
Governmental Entities and the adoption of this Agreement by Seller's
shareholders) to perform all of its respective obligations hereunder. The
execution and delivery of this Agreement and the completion of the transactions
contemplated hereby have been duly authorized and approved by all necessary
corporate action in respect thereof on the part of Seller, except for the
adoption of this Agreement by Seller's shareholders. This Agreement has been
duly and validly executed and delivered by Seller and, assuming due
authorization, execution and delivery by Buyer, constitutes a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, subject, as to enforceability, to bankruptcy, insolvency and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.
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(b) Neither the execution and delivery of this Agreement nor
completion of the Transactions or compliance by Seller with any of the
provisions hereof does or will (i) conflict with or result in a breach of any
provisions of the Certificate of Incorporation or Bylaws of Seller or the
equivalent documents of any Seller Subsidiary, (ii) violate, conflict with or
result in a breach of any term, condition or provision of, or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of Seller or any Seller
Subsidiary pursuant to, any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other material instrument or obligation to
which Seller or any Seller Subsidiary is a party, or by which any of their
respective properties or assets may be bound or affected, or (iii) subject to
receipt of all required approvals from Governmental Entities and the
shareholders of Seller, violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Seller or any Seller Subsidiary.
(c) To the best knowledge of Seller, except for (i) the filing
of applications and notices with and the approvals of the OTS and the FDIC, (ii)
the filing of applications with the Department and the approvals of the
Superintendent, (iii) the filing and clearance of the Proxy Statement relating
to the meeting of shareholders of Seller to be held pursuant to Section 5.2
hereof with the SEC, (iv) the adoption of this Agreement by the requisite vote
of the shareholders of Seller, (v) the filing of the Certificate of Merger with
the Secretary of State of Delaware in connection with the Corporate Merger and
(vi) review of the Transactions by the DOJ under federal antitrust laws, no
consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary on the part of Seller or Seller
Bank in connection with the execution and delivery by Seller of this Agreement
and the completion of the Transactions.
(d) As of the date hereof, Seller is not aware of any reasons
relating to Seller or Seller Bank (including CRA compliance) why all consents
and approvals shall not be procured from all Governmental Entities having
jurisdiction over the Transactions as shall be necessary for the completion of
the Transactions and the continuation by Buyer after the Effective Time of the
business of each of Seller and Seller Bank, respectively, as such business is
carried on immediately prior to the Effective Time, free of any conditions or
requirements which could impair the value of Seller or Seller Bank to Buyer.
3.6 Securities Documents and Regulatory Reports.
(a) Since January 1, 1998, Seller has timely filed with the
SEC and the NASD all Securities Documents required by the Securities Laws and
such Securities Documents complied in all material respects with the Securities
Laws and did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) Since January 1, 1998, each of Seller and Seller Bank has
duly filed with the OTS and any other applicable federal or state banking
authority, as the case may be, the reports required to be filed under applicable
laws and regulations and such reports were in all material
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respects complete and accurate and in compliance with the requirements of
applicable laws and regulations. In connection with the most recent examinations
of Seller and Seller Bank by the OTS, neither Seller nor Seller Bank was
required to correct or change any action, procedure or proceeding which Seller
or Seller Bank believes has not been corrected or changed as required.
3.7 Financial Statements.
(a) Seller has previously delivered or made available to Buyer
accurate and complete copies of the Seller Financial Statements, which are
accompanied by the audit reports of KPMG, LLP, independent certified public
accountants with respect to Seller. The Seller Financial Statements, as well as
the Seller Financial Statements to be delivered pursuant to Section 5.8 hereof,
fairly present or will fairly present, as the case may be, the consolidated
financial condition of Seller as of the respective dates set forth therein, and
the consolidated income, changes in stockholders' equity and cash flows of
Seller for the respective periods or as of the respective dates set forth
therein.
(b) Each of the Seller Financial Statements referred to in
Section 3.7(a) has been or will be, as the case may be, prepared in accordance
with GAAP consistently applied during the periods involved, except as stated
therein. The audits of Seller have been conducted in all material respects in
accordance with generally accepted auditing standards. The books and records of
Seller and the Seller Subsidiaries are being maintained in compliance with
applicable legal and accounting requirements, and such books and records
accurately reflect all dealings and transactions in respect of the business,
assets, liabilities and affairs of Seller and its Subsidiaries.
3.8 Material Adverse Change. Since December 31, 2000, (i) Seller and
its Subsidiaries have conducted their respective businesses in the ordinary and
usual course (excluding the incurrence of expenses in connection with this
Agreement and the Transactions) and (ii) no event has occurred or circumstance
arisen that, in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect on Seller.
3.9 Environmental Matters.
(a) Seller and its Subsidiaries are in compliance with all
Environmental Laws in all material respects. Neither Seller nor any Seller
Subsidiary has received any communication alleging that Seller or any Seller
Subsidiary is not in such compliance and, to the best knowledge of Seller, there
are no present circumstances that would prevent or interfere with the
continuation of such compliance.
(b) To the best of Seller's knowledge, none of the properties
owned, leased or operated by Seller or a Seller Subsidiary has been or is in
violation of or liable under any Environmental Law.
(c) To the best of Seller's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents that
could reasonably form the basis of any Environmental Claim or other claim or
action or governmental investigation that could result in the
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imposition of any liability arising under any Environmental Law against Seller
or a Seller Subsidiary or against any person or entity whose liability for any
Environmental Claim Seller or a Seller Subsidiary has or may have retained or
assumed either contractually or by operation of law.
(d) Seller has not conducted any environmental studies during
the past five years with respect to any properties owned or leased by it or any
Seller Subsidiary.
3.10 Tax Matters.
(a) Seller and its Subsidiaries have timely filed all federal,
state and local (and, if applicable, foreign) income, franchise, bank, excise,
real property, personal property and other tax returns required by applicable
law to be filed by them (including estimated tax returns, income tax returns,
information returns and withholding and employment tax returns) and have paid,
or where payment is not required to have been made, have set up an adequate
reserve or accrual for the payment of, all taxes required to be paid in respect
of the periods covered by such returns and, as of the Effective Time, will have
paid, or where payment is not required to have been made, will have set up an
adequate reserve or accrual for the payment of, all material taxes for any
subsequent periods ending on or prior to the Effective Time. Neither Seller nor
any Seller Subsidiary will have any material liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign)
income, franchise, bank, excise, real property, personal property and other tax
returns filed by Seller and its Subsidiaries are complete and accurate in all
material respects. Neither Seller nor any Seller Subsidiary is delinquent in the
payment of any tax, assessment or governmental charge or has requested any
extension of time within which to file any tax returns in respect of any fiscal
year or portion thereof. The federal, state and local income tax returns of
Seller and its Subsidiaries have not been audited by any tax authorities during
the past six years and no deficiencies for any tax, assessment or governmental
charge have been proposed, asserted or assessed (tentatively or otherwise)
against Seller or any Seller Subsidiary which have not been settled and paid.
There are currently no agreements in effect with respect to Seller or any Seller
Subsidiary to extend the period of limitations for the assessment or collection
of any tax. As of the date hereof, no audit, examination or deficiency or refund
litigation with respect to any such return is pending or, to the best of
Seller's knowledge, threatened.
(c) Neither Seller nor any Seller Subsidiary (i) is a party to
any agreement providing for the allocation or sharing of taxes, (ii) is required
to include in income any adjustment pursuant to Section 481(a) of the Code or by
reason of a voluntary change in accounting method initiated by Seller or any
Subsidiary (nor does Seller have any knowledge that the IRS has proposed any
such adjustment or change of accounting method) or (iii) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
(d) Seller and its Subsidiaries have withheld amounts from
their employees, stockholders, or holders of public deposit accounts in
compliance with the tax withholding provisions of applicable federal, state and
local laws, have filed all federal, state and local returns
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and reports for all periods for which such returns or reports would be due with
respect to income tax withholding, social security, unemployment taxes, income
and other taxes and all payments or deposits with respect to such taxes have
been timely made.
3.11 Legal Proceedings. There are no actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of Seller, that are unasserted or threatened against Seller or any of
its Subsidiaries or against any asset, interest or right of Seller or any of its
Subsidiaries, or against any officer, director or employee of any of them.
Neither Seller nor any Seller Subsidiary is a party to any order, judgment or
decree.
3.12 Compliance with Laws.
(a) Each of Seller and the Seller Subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of, and has
made all filings, applications and registrations with, all Governmental Entities
that are required in order to permit it to carry on its business as it is
presently being conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and will not be
adversely affected by virtue of the completion of the Transactions; and to the
best knowledge of Seller, no suspension or cancellation of any of the same is
threatened.
(b) Neither Seller nor any Seller Subsidiary is in violation
of its respective Certificate of Incorporation, Charter or Bylaws, or of any
applicable federal, state or local law or ordinance or any order, rule or
regulation of any Governmental Entity (including all banking (including all
regulatory capital requirements), truth-in-lending, usury, fair credit
reporting, consumer protection, securities, municipal securities, safety,
health, environmental, zoning, anti-discrimination, antitrust, and wage and hour
laws, ordinances, orders, rules and regulations), or in default with respect to
any order, writ, injunction or decree of any court, or in default under any
order, license, regulation or demand of any Governmental Entity; and neither
Seller nor any Seller Subsidiary has received any notice or communication from
any Governmental Entity asserting that Seller or any Seller Subsidiary is in
violation of any of the foregoing. Neither Seller nor any Seller Subsidiary is
subject to any regulatory or supervisory cease and desist order, agreement,
written directive, memorandum of understanding or written commitment (other than
those of general applicability to savings banks or holding companies thereof
issued by Governmental Entities), and neither of them has received any written
communication requesting that it enter into any of the foregoing.
3.13 Certain Information. None of the information relating to Seller
and its Subsidiaries supplied or to be supplied by them for inclusion in the
Proxy Statement, as of the date such Proxy Statement is mailed to shareholders
of Seller and up to and including the date of the meeting of shareholders to
which such Proxy Statement relates, will contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, provided that information as of a later date shall be deemed to
modify information as of an earlier date.
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3.14 Employee Benefit Plans.
(a) Seller has Previously Disclosed all Seller Employee Plans
and has heretofore delivered to Buyer accurate and complete copies of each
(including amendments and agreements relating thereto) together with, in the
case of qualified plans, (i) the most recent actuarial and financial reports
prepared with respect thereto, (ii) the most recent annual reports filed with
any Governmental Entity with respect thereto, and (iii) all rulings and
determination letters and any open requests for rulings or letters that pertain
thereto.
(b) None of Seller, any Seller Subsidiary, any qualified
Seller Employee Plan or, to the best of Seller's knowledge, any fiduciary of a
qualified Seller Employee Plan, has incurred any material liability to the PBGC
or the IRS with respect to any qualified Seller Employee Plan. To the best of
Seller's knowledge, no reportable event under Section 4043(b) of ERISA has
occurred with respect to any qualified Seller Employee Plan.
(c) Neither Seller nor any Seller Subsidiary participates in
or has incurred any liability under Section 4201 of ERISA for a complete or
partial withdrawal from a multi-employer plan (as such term is defined in
ERISA).
(d) A favorable determination letter has been issued by the
IRS with respect to each Seller Employee Plan which is intended to qualify under
Section 401 of the Code to the effect that such Seller Employee Plan is
qualified under Section 401 of the Code, and the trust associated with such
Seller Employee Plan is tax exempt under Section 501 of the Code. No such letter
has been revoked or, to the best of Seller's knowledge, is threatened to be
revoked, and Seller does not know of any ground on which such revocation may be
based. Neither Seller nor any Seller Subsidiary has any liability under any such
Seller Employee Plan that is not reflected in the Seller Financial Statements,
other than liabilities incurred in the ordinary course of business in connection
therewith subsequent to the date thereof.
(e) To the best of Seller's knowledge, no transaction
prohibited by Section 406 of ERISA (and not exempt under Section 408 of ERISA or
Section 4975 of the Code) has occurred with respect to any Seller Employee Plan
which would result in the imposition, directly or indirectly, of an excise tax
under Section 4975 of the Code.
(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each Seller Employee
Plan or ERISA.
(g) Any Seller Defined Benefit Plan has been heretofore
terminated and neither Seller nor any Seller Subsidiary has any current, future
or contingent obligation or liability to any Seller Defined Benefit Plan or any
participant or beneficiary thereof or the PPGC with respect thereto.
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(h) To the best of Seller's knowledge, the Seller Employee
Plans have been operated in compliance in all material respects with the
applicable provisions of ERISA, the Code, all regulations, rulings and
announcements promulgated or issued thereunder and all other applicable
governmental laws and regulations.
(i) There are no pending or, to the best knowledge of Seller,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of Seller Employee Plans or any trust related thereto or any
fiduciary thereof.
(j) Neither Seller nor any Seller Subsidiary has made any
payments, or is or has been a party to any agreement or any Seller Employee
Plan, that could obligate it or its successor to make payments or deemed
payments, that are not or will not be deductible because of Sections 162(m) or
280G of the Code.
3.15 Certain Contracts.
(a) Neither Seller nor any Seller Subsidiary is a party to, is
bound or affected by, receives, or is obligated to pay, benefits under (i) any
agreement, arrangement or commitment, including any agreement, indenture or
other instrument, relating to the borrowing of money by Seller or a Seller
Subsidiary (other than in the case of Seller Bank deposits, FHLB advances,
federal funds purchased and securities sold under agreements to repurchase in
the ordinary course of business) or the guarantee by Seller or a Seller
Subsidiary of any obligation, other than by Seller Bank in the ordinary course
of its banking business, (ii) any agreement, arrangement or commitment relating
to the employment of a consultant or the employment, election or retention in
office of any present or former director, officer or employee of Seller or a
Seller Subsidiary, (iii) any agreement, arrangement or understanding pursuant to
which any payment (whether of severance pay or otherwise) became or may become
due to any director, officer or employee of Seller or a Seller Subsidiary upon
execution of this Agreement or upon or following completion of any of the
Transactions (either alone or in connection with the occurrence of any
additional acts or events); (iv) any agreement, arrangement or understanding
pursuant to which Seller or a Seller Subsidiary is obligated to indemnify any
director, officer, employee or agent of Seller or a Seller Subsidiary; (v) any
agreement, arrangement or understanding to which Seller or a Seller Subsidiary
is a party or by which any of the same is bound which limits the freedom of
Seller or a Seller Subsidiary to compete in any line of business or with any
person; (vi) any assistance agreement, supervisory agreement, memorandum of
understanding, consent order, cease and desist order or condition of any
regulatory order or decree with or by the OTS, the FDIC or any other
Governmental Entity; (vii) any agreement, arrangement or understanding which
would be required to be filed as an exhibit pursuant to Item 601(b)(10) of
Regulation S-K to Seller's Annual Report on Form 10-K under the Exchange Act and
which has not been so filed; or (viii) any agreement pursuant to which loans
have been sold by Seller or a Seller Subsidiary which impose any potential
recourse (by representation, warranty, covenant or other contractual terms) upon
Seller or any Seller Subsidiary.
(b) Neither Seller nor any Seller Subsidiary is in default or
in non-compliance under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party or by which its
assets, business or operations may be bound or
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affected, whether entered into in the ordinary course of business or otherwise
and whether written or oral, and there has not occurred any event that with the
lapse of time or the giving of notice, or both, would constitute such a default
or non-compliance.
3.16 Brokers and Finders. Except for Previously Disclosed agreements
with FinPro, Inc., neither Seller nor any Seller Subsidiary nor any of their
respective directors, officers or employees, has employed any broker or finder
or incurred any liability for any broker or finder fees or commissions in
connection with the transactions contemplated hereby.
3.17 Insurance. Each of Seller and its Subsidiaries is insured for
reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured and has
maintained all insurance required by contract or applicable laws and
regulations.
3.18 Properties. All real and personal property owned by Seller or its
Subsidiaries or presently used by any of them in its respective business is in
good condition (ordinary wear and tear excepted) and is sufficient to carry on
the business of Seller and its Subsidiaries in the ordinary course of business
consistent with their past practices. Each of Seller and its Subsidiaries has
good and marketable title free and clear of all liens, encumbrances, charges,
defaults or equities (other than equities of redemption under applicable
foreclosure laws) to all of its properties and assets, real and personal, except
(a) liens for current taxes not yet due or payable, (b) pledges to secure
deposits and other liens incurred in the ordinary course of its banking
business, (c) such imperfections of title, easements and encumbrances, if any,
as are de minimis in character amount or extent and (d) as reflected in the
Seller Financial Statements. All real and personal property which is material to
Seller's business on a consolidated basis and leased or licensed by Seller or a
Seller Subsidiary is held pursuant to leases or licenses which are valid and
enforceable in accordance with their respective terms and such leases and
licenses will not terminate or lapse prior to the Effective Time or thereafter
by reason of completion of any of the Transactions. All improved real property
owned by Seller or its Subsidiaries is in compliance with all applicable zoning
laws in all material respects.
3.19 Labor. No work stoppage involving Seller or a Seller Subsidiary is
pending or, to the best knowledge of Seller, threatened. Neither Seller nor any
of its Subsidiaries is involved in or, to the best knowledge of Seller,
threatened with or affected by, any labor dispute, arbitration, lawsuit or
administrative proceeding involving the employees of Seller or any Seller
Subsidiary. Employees of Seller and Seller Subsidiaries are not represented by
any labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees, and to the best of Seller's knowledge, there
have been no efforts to unionize or organize any employees of Seller or any
Seller Subsidiaries during the past five years.
3.20 Allowance for Loan Losses. The allowance for loan losses reflected
on Seller's consolidated balance sheet included in the Seller Financial
Statements is, and will be in the case of subsequently delivered Seller
Financial Statements, in the opinion of Seller's management, adequate as of
their respective dates under the requirements of GAAP to provide for reasonably
anticipated losses on outstanding loans, net of recoveries. The real estate
owned reflected in the Seller Financial
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Statements is, and will be in the case of subsequently delivered Seller
Financial Statements, carried at the lower of cost or fair value, less estimated
costs to sell, as required by GAAP.
3.21 Material Interests of Certain Persons.
(a) Except as set forth in Seller's Proxy Statement for its
2001 Annual Meeting of Stockholders, no officer, director or employee of Seller,
any Seller Subsidiary or any "associate" (as such term is defined in Rule 14a-1
under the Exchange Act) or related interest of any such person has any material
interest in any material contract or property (real or personal, tangible or
intangible), used in, or pertaining to, the business of Seller or any Seller
Subsidiary.
(b) Except as set forth in Seller's Proxy Statement for its
2001 Annual Meeting of Stockholders there are no Insider Loans. All outstanding
Insider Loans were made in the ordinary course of business and on substantially
the same terms as those prevailing at the time for comparable transactions with
third parties and were, with respect to executive officers and directors,
approved by the appropriate board of directors in accordance with applicable law
and regulations.
3.22 Fairness Opinion. Seller has received an opinion from FinPro, Inc.
to the effect that, as of the date hereof, the consideration to be received by
the shareholders of Seller pursuant to this Agreement is fair, from a financial
point of view, to such shareholders.
3.23 No Undisclosed Liabilities. Seller and its Subsidiaries do not
have any liability whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes (and there
is no past or present fact, situation, circumstance, condition or other basis
for any present or future action, suit or proceeding, hearing, charge,
complaint, claim or demand against Seller or its Subsidiaries giving rise to any
such liability) required in accordance with GAAP to be reflected in an audited
consolidated balance sheet of Seller, except (a) for liabilities set forth or
reserved against in the most recent Seller Financial Statement prior to the date
hereof and (b) liabilities occurring in the ordinary course of business since
the most recent Seller Financial Statements prior to the date hereof.
3.24 Loan Portfolio. (a) All loans and discounts shown on the Seller
Financial Statements or which were entered into after the date of the most
recent balance sheet included in the Seller Financial Statements were and shall
be made for good, valuable and adequate consideration in the ordinary course of
the business of Seller and its Subsidiaries, in accordance with sound banking
practices, and are not subject to any known defenses, set-offs or
counter-claims, including any such as are afforded by usury or truth in lending
laws, except as may be provided by bankruptcy, solvency or similar laws or by
general principles of equity, (b) the notes or other evidence of indebtedness
evidencing such loans and all forms of pledges, mortgages and other collateral
documents and security agreements are and shall be in full force and effect,
valid, true and genuine and what they purport to be, and (c) Seller and its
Subsidiaries have complied in all material respects and shall prior to the
Effective Time comply in all material respects with all laws and regulations
relating to such loans.
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3.25 Investment Portfolio. All investment securities held by Seller or
its Subsidiaries, as reflected in the consolidated balance sheets of Seller
included in the Seller Financial Statements, are carried in accordance with
GAAP, specifically including but not limited to, FAS 115.
3.26 Interest Rate Risk Management Instruments. Seller has Previously
Disclosed all interest rate swaps, caps, floors, option agreements or other
interest rate risk management arrangements or agreements, whether entered into
for the account of Seller or its Subsidiaries or for the account of a customer
of Seller or one of its Subsidiaries. All such arrangements and agreements were
entered into in the ordinary course of business and in accordance with prudent
banking practice and applicable rules, regulations and policies and with counter
parties believed to be financially responsible at the time and are legal, valid
and binding obligations of Seller or one of its Subsidiaries in accordance with
their terms (subject to the provisions of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws effecting the
enforceability of creditors rights generally from time to time and effect, and
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion), and are in full force
and effect. Seller and its Subsidiaries have duly performed all of their
obligations thereunder to the extent that such obligations to perform have
accrued; and, to Seller's knowledge, there are no breaches, violations or
defaults or allegations or assertions of such by any party thereunder.
3.27 Interim Events. Since June 30, 2001, neither Seller nor any of its
Subsidiaries has paid or declared any dividend or made any other distribution to
shareholders or taken any action which if taken after the date hereof would
require the prior written consent of Buyer pursuant to Section 5.6 hereof.
3.28 Indemnification. To the best knowledge of Seller, no action or
failure to take action by any present or former director, advisory director,
officer, employee or agent of Seller or any Seller Subsidiary has occurred which
would as of the date hereof give rise to a claim or a potential claim by any
such person for indemnification from Seller or any Seller Subsidiary.
3.29 Disclosures. None of the representations and warranties of Seller
or any of the written information or documents furnished or to be furnished by
Seller to Buyer in connection with or pursuant to this Agreement or in
connection with the completion of the Transactions, when considered as a whole,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact required to be stated or necessary to make
any such information or document, in light of the circumstances, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows, except as
Previously Disclosed:
4.1 Organization, Standing and Authority of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York, with full corporate power and authority to own and
lease all of its properties and assets and to carry on its business as now
conducted, and Buyer is duly licensed or qualified to do business and is in good
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standing in each jurisdiction in which its ownership or leasing of property or
the conduct of its business requires such licensing or qualification.
4.2 Authorized and Effective Agreement.
(a) Buyer has all requisite power and authority to enter into
this Agreement and (subject to receipt of all necessary approvals for
Governmental Entities) to perform all of its obligations hereunder. The
execution and delivery of this Agreement and the completion of the Transactions
have been duly authorized and approved by the Board of Directors of Buyer and no
other corporate action is required on the part of Buyer. This Agreement has been
duly and validly executed and delivered by Buyer and, assuming due
authorization, execution and delivery by Seller, constitutes the legal, valid
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms, subject, as to enforceability, to bankruptcy, insolvency and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles.
(b) Neither the execution and delivery of this Agreement nor
completion of the Transactions, or compliance by Buyer with any of the
provisions hereof, does or will (i) conflict with or result in a breach of any
provisions of the Charter or Bylaws of Buyer or the equivalent documents of any
Buyer Subsidiary, (ii) violate, conflict with or result in a breach of any term,
condition or provision of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or give
rise to any right of termination, cancellation or acceleration with respect to,
or result in the creation of any lien, charge or encumbrance upon any property
or asset of Buyer or any Buyer Subsidiary pursuant to, any material note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other material
instrument or obligation to which Buyer or any Buyer Subsidiary is a party, or
by which any of their respective properties or assets may be bound or affected,
or (iii) subject to receipt of all required approvals from Governmental
Entities, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer or any Buyer Subsidiary.
(c) To the best knowledge of Buyer, except for the consents,
approvals, filings or registrations to be made as set forth in Section 3.5(c),
no consents or approvals of or filings or registrations with any Governmental
Entity or with any third party are necessary on the part of Buyer or Merger Sub
in connection with the execution and delivery by Buyer of this Agreement and the
completion of the Transactions.
(d) As of the date hereof, Buyer is not aware of any reasons
relating to it (including CRA compliance) why all consents and approvals shall
not be procured from all Governmental Entities having jurisdiction over the
Transactions as shall be necessary for completion of the Transactions and
continuation by Buyer after the Effective Time of the business of each of Seller
and Seller Bank, respectively, as such business is carried on immediately prior
to the Effective Time, free of any conditions or requirements which could impair
the value of Seller or Seller Bank to Buyer.
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4.3 Securities Documents and Regulatory Reports.
(a) Since April 1, 1998, Parent has timely filed with the SEC
and the NASD all Securities Documents required by the Securities Laws and such
Securities Documents complied in all material respects with the Securities Laws
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) Buyer has since April 1, 1998 duly filed with the
Department and any other applicable federal or state banking authority the
reports required to be filed by it under applicable laws and regulations and
such reports were in all material respects complete and accurate and in
compliance with the requirements of applicable laws and regulations. In
connection with the most recent examination of Buyer by its primary regulator,
Buyer was not required to correct or change any action, procedure or proceeding
which Buyer or Buyer Bank believes has not been corrected or changed as
required.
4.4 Financial Statements.
(a) The Parent Financial Statements fairly present the
consolidated financial condition of Parent as of the respective dates set forth
therein, and the consolidated income, changes in equity and cash flows of Parent
for the respective periods or as of the respective dates set forth therein.
(b) Each of the Parent Financial Statements has been prepared
in accordance with GAAP consistently applied during the periods involved, except
as stated therein. The audits of Parent have been conducted in accordance with
generally accepted auditing standards. The books and records of Parent, Buyer
and the Buyer Subsidiaries are being maintained in compliance with applicable
legal and accounting requirements, and all such books and records accurately
reflect all dealings and transactions in respect of the business, assets,
liabilities and affairs of Parent, Buyer and the Buyer Subsidiaries.
4.5 Material Adverse Change. Since December 31, 2000, no event has
occurred or circumstance arisen that, in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect on Buyer.
4.6 Legal Proceedings. There are no actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of Buyer, that are unasserted or threatened against Parent, Buyer or
any of their Subsidiaries or against any asset, interest or right of Parent,
Buyer or any of their Subsidiaries, or against any officer, director or employee
of any of them, which individually or in the aggregate could adversely affect
the ability of Buyer to consummate any of the Transactions.
4.7 Certain Information. None of the information relating to Parent,
Buyer or their affiliates supplied or to be supplied by Buyer for inclusion in
the Proxy Statement, as of the date such Proxy Statement is mailed to
shareholders of Seller and up to and including the date of the
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meeting of shareholders to which such Proxy Statement relates, will contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, provided that information as of a later date shall be
deemed to modify information as of an earlier date.
4.8 Brokers and Finders. Except for Sandler O'Neil & Partners, L.P.,
neither Buyer nor any of its directors, officers or employees, has employed any
broker or finder or incurred any liability for any broker or finder fees or
commissions in connection with the transactions contemplated hereby.
4.9 Financial Resources. Buyer has the financial wherewithal and has,
or will have prior to the Effective Time, sufficient funds to perform its
obligations under this Agreement.
4.10 Disclosures. None of the representations and warranties of Buyer
or any of the written information or documents furnished or to be furnished by
Buyer to Seller in connection with or pursuant to this Agreement or in
connection with the completion of the Transactions, when considered as a whole,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact required to be stated or necessary to make
any such information or document, in light of the circumstances, not misleading.
ARTICLE V
COVENANTS
5.1 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of Seller and Buyer (a) shall use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary or advisable under applicable laws and
regulations so as to permit and otherwise enable completion of the Corporate
Merger not later than March 31, 2002, and (b) shall cooperate fully with each
other to that end.
5.2 Shareholders Meeting. Seller shall take all action necessary to
properly call and convene a meeting of its shareholders as soon as practicable
after the date hereof to consider and vote upon the adoption of this Agreement.
Subject to the receipt of an updated fairness opinion from its financial advisor
as set forth in Section 6.2(e), the Board of Directors of Seller will recommend
that the shareholders of Seller adopt this Agreement; provided that the Board of
Directors of Seller may fail to make such recommendation, or withdraw, modify or
change any such recommendation, if such Board of Directors, after having
consulted with and considered the advice of outside counsel, has determined that
the making of such recommendation, or the failure to withdraw, modify or change
such recommendation, would constitute a breach of the fiduciary duties of such
directors under applicable Delaware law.
5.3 Regulatory Matters.
(a) Seller, with the cooperation of Buyer, shall promptly
prepare and file the Proxy Statement relating to the meeting of shareholders of
Seller and thereafter Seller shall promptly mail to its shareholders the Proxy
Statement.
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(b) The Parties shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file within 60 days after the
date hereof or as soon thereafter as is reasonably practicable, all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all Governmental Entities and third parties which are
necessary or advisable to consummate the Transactions. Each Party shall have the
right to review in advance, and to the extent practicable each will consult with
the other on, in each case subject to applicable laws relating to the exchange
of information, all the information which appears in any filing made by the
other Party with, or written materials submitted by the other Party, to any
third party or any Governmental Entity in connection with the Transactions. In
exercising the foregoing right, each Party shall act reasonably and as promptly
as practicable. The Parties 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 Governmental Entities necessary or advisable to
consummate the Transactions and each Party will keep the other apprised of the
status of matters relating to completion of the Transactions. The Parties agree
that they will use their reasonable best efforts to cause the Closing Date to
occur not later than March 31, 2002.
(c) Each Party shall, upon request, furnish the other Party
with all information concerning itself, its Subsidiaries, directors and
officers, the shareholders of Seller and such other matters as may be reasonably
necessary or advisable in connection with any statement, filing, notice or
application made by or on behalf of any Party or its Subsidiaries to any
Governmental Entity in connection with the Transactions.
(d) Each Party shall promptly furnish the other Party with
copies of written communications received by it or any of its Subsidiaries from,
or delivered by any of the foregoing to, any Governmental Entity in respect of
the Transactions.
5.4 Investigation and Confidentiality.
(a) Seller shall permit Buyer and its representatives
reasonable access to its and its Subsidiaries properties and personnel, and
shall disclose and make available to Buyer and its representatives, all books,
papers and records relating to the assets, stock ownership, properties,
operations, obligations and liabilities of it and its Subsidiaries, including
all books of account (including the general ledger), tax records, minute books
of meetings of boards of directors (and any committees thereof) and
shareholders, organizational documents, bylaws, material contracts and
agreements, filings with any regulatory authority, accountants' work papers,
litigation files, loan files, plans affecting employees, and any other business
activities or prospects in which Buyer may have a reasonable interest, provided
that such access and any such request for information shall be reasonably
related to the Transactions and, in the reasonable opinion of Seller, not unduly
interfere with normal operations. Seller may exclude Buyer from access to
information relating to Seller's consideration of Acquisition Proposals whether
or not involving a Superior Offer. Seller and its Subsidiaries shall make their
respective directors, officers, employees and agents and authorized
representatives (including counsel and independent public accountants)
reasonably available to confer with Buyer and its representatives.
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(b) All information furnished previously in connection with
the Transactions contemplated by this Agreement or pursuant hereto shall be
treated as the sole property of the Party furnishing the information until
completion of the Corporate Merger and, if the Corporate Merger shall not occur,
the Party receiving the information shall either destroy or return to the Party
which furnished such information all documents or other materials containing,
reflecting or referring to such information, shall use its best efforts to keep
confidential all such information, and shall not directly or indirectly use such
information for any competitive or other commercial purposes. The obligation to
keep such information confidential shall continue for two years after the
termination of this Agreement but shall not apply to (i) any information which
(x) the Party receiving the information can establish was already in its
possession prior to the disclosure thereof by the Party furnishing the
information, (y) was then generally known to the public, or (z) became known to
the public through no fault of the Party receiving the information; or (ii)
disclosures pursuant to a legal requirement or in accordance with an order of a
court of competent jurisdiction, provided that the Party which is the subject of
any such legal requirement or order shall use its best efforts to give the other
Party at least ten business days prior notice thereof.
5.5 Press Releases. The Parties shall agree as to the form, substance
and timing of any press release related to this Agreement or the Transactions,
and consult with each other as to the form, substance and timing of other public
disclosures which may relate to the Transactions, provided, however, that
nothing contained herein shall prohibit either Party, following notification to
the other Party, from making any disclosure which is required by law or
regulation.
5.6 Business of the Parties.
(a) During the period from the date of this Agreement and
continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement or with the prior written consent of Buyer, Seller
and its Subsidiaries shall carry on their respective businesses in the ordinary
course consistent with past practice. During such period, Seller will, and will
cause each of its Subsidiaries to, use all reasonable efforts to (x) preserve
its business organization intact, (y) keep available the present services of its
employees and (z) preserve the goodwill of its customers and others with whom it
has business relationships. Without limiting the generality of the foregoing,
except with the prior written consent of Buyer (which consent under subparts
(vi), (ix) and (xiv) shall not be unreasonably withheld or delayed) or as
expressly contemplated hereby, between the date hereof and the Effective Time,
Seller shall not, and shall cause each Seller Subsidiary not to:
(i) declare, set aside, make or pay any dividend
or other distribution (whether in cash, stock or property or any combination
thereof) in respect of Seller Common Stock, except for regular quarterly cash
dividends at a rate per share of Seller Common Stock not in excess of $0.17 per
share (with record and payment dates to be consistent with past practices), but
only to the extent that such dividends may be funded out of current earnings,
without regard to severance costs paid by Seller or Seller Bank pursuant to
Previously Disclosed employment or change in control severance agreements or the
financial reporting expense relating to the retirement of the Seller ESOP loan
pursuant to Section 5.11(e);
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(ii) issue any shares of its capital stock, other
than (i) upon exercise of Seller Options referred to in Section 3.1(a) hereof,
or issue, grant, modify or authorize any Rights; purchase any shares of Seller
Common Stock; or effect any recapitalization, reclassification, stock dividend,
stock split or like change in capitalization;
(iii) amend its Certificate of Incorporation, Bylaws
or similar organizational documents; impose, or suffer the imposition, on any
share of stock or other ownership interest held by Seller in a Subsidiary of any
lien, charge or encumbrance or permit any such lien, charge or encumbrance to
exist; or waive or release any material right or cancel or compromise any
material debt or claim;
(iv) increase the rate of compensation of any of its
directors, officers or employees, or pay or agree to pay any bonus, severance,
or change in control benefit to, or provide any other new employee benefit or
incentive to, any of its directors, officers or employees, except (i) as may be
required pursuant to Previously Disclosed commitments existing on the date
hereof, (ii) as may be required by law, or (iii) regular pay increases to
non-officer employees in the ordinary course of business consistent with past
practices;
(v) enter into or, except as may be required by law,
modify any Seller Employee Plan or other employee benefit, incentive or welfare
contract, plan or arrangement, or any trust agreement related thereto, in
respect of any of its directors, officers or employees; or make any
contributions to any qualified Seller Employee Plan including the Seller ESOP
(other than as required by law or regulation or in a manner and amount
consistent with past practices);
(vi) except for any loans pursuant to legally binding
commitments in effect on the date of this Agreement that have been Previously
Disclosed, originate or purchase any loan other than (A) a brokered loan
pursuant to a commitment Previously Disclosed and existing on the date hereof,
(B) an unsecured loan not in excess of $50,000, (C) a loan secured by a first
trust or mortgage on a one- to four-family residential property not in excess of
$350,000 or (D) a loan secured by a first trust or mortgage on commercial real
property not in excess of $400,000;
(vii) enter into (A) any transaction, agreement,
arrangement or commitment not made in the ordinary course of business, (B) any
agreement, indenture or other instrument relating to the borrowing of money by
Seller or a Subsidiary or guarantee by Seller or any Seller Subsidiary of any
such obligation, except in the case of Seller Bank for deposits, FHLB advances,
federal funds purchased and securities sold under agreements to repurchase in
the ordinary course of business consistent with past practice, (C) any
agreement, arrangement or commitment relating to the employment of an employee
or consultant, or amend any such existing agreement, arrangement or commitment;
or (D) any contract, agreement or understanding with a labor union;
(viii) change any of its methods of accounting,
except as required by changes in laws or regulations or GAAP, or change any of
its methods of reporting income and deductions for federal income tax purposes
from those employed in the preparation of its last federal income tax return,
except as required by changes in laws or regulations;
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(ix) make any expenditures in excess of $30,000
individually or $50,000 in the aggregate, other than pursuant to binding
commitments existing on the date hereof and expenditures necessary to maintain
existing assets in good repair; or enter into any new agreement or renew any
existing agreement that involves an annual expenditure in excess of $15,000,
unless such agreement may be terminated at any time by Seller or a Seller
Subsidiary without penalty or premium upon not more than 60 days' advance
written notice;
(x) file any applications or make any contract with
respect to branching or site location or relocation;
(xi) acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) control over or any equity
interest in any business or entity, except for investments in readily marketable
equity securities in the ordinary course of business and not exceeding 5% of the
outstanding shares of any class;
(xii) enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any of its assets or
rights or requiring the consent of any party to the transfer and assignment of
any such assets or rights;
(xiii) except as necessitated in the reasonable
opinion of Seller due to changes in interest rates, and in accordance with safe
and sound banking practices, change or modify in any material respect any of its
lending or investment policies, except to the extent required by law or an
applicable regulatory authority;
(xiv) enter into any futures contract, option
contract, interest rate caps, interest rate floors, interest rate exchange
agreement or other agreement for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest;
(xv) knowingly take any action that would result in
any of the representations and warranties of Seller contained in this Agreement
not to be true and correct in any material respect at the Effective Time or that
would cause any of the conditions of Sections 6.1 or 6.3 hereof not to be
satisfied;
(xvi) knowingly take any action that would materially
impede or delay the completion of the Transactions or the ability of any Party
to perform its covenants and agreements under this Agreement;
(xvii) materially increase or decrease the rate of
interest paid on time deposits, or on certificates of deposit, except in a
manner and pursuant to policies consistent with past practices; or
(xviii) agree to do any of the foregoing.
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(b) Seller shall promptly notify Buyer in writing of the
occurrence of any matter or event known to and directly involving Seller or any
of its Subsidiaries that has had or is reasonably likely to have, either
individually or in the aggregate, a Material Adverse Effect on Seller.
(c) Except with the prior written consent of Seller or as
expressly contemplated hereby, between the date hereof and the Effective Time,
Buyer shall not, and shall cause each Buyer Subsidiary not to:
(i) knowingly take any action that would result
in any of the representations and warranties of Buyer contained in this
Agreement not to be true and correct in any material respect at the Effective
Time or that would cause any of the conditions of Sections 6.1 or 6.2 hereof not
to be satisfied;
(ii) knowingly take any action that would materially
impede or delay the receipt of any necessary regulatory approvals or the
completion of the Transactions contemplated by this Agreement or the ability of
either Party to perform its covenants and agreements under this Agreement; or
(iii) agree to do any of the foregoing.
(d) Notwithstanding the foregoing, Seller shall cause Seller
Bank to close its New Jersey loan production office at the earliest practicable
time.
5.7 Certain Actions.
(a) Seller shall not, and shall cause each Seller Subsidiary
not to, solicit or encourage inquiries or proposals with respect to, furnish any
information relating to, or participate in any negotiations or discussions
concerning, any acquisition, purchase of all or a substantial portion of the
assets of, or any equity interest in, Seller or a Subsidiary (other than with
Buyer or an affiliate thereof), provided, however, that the Board of Directors
of Seller may furnish such information or participate in such negotiations or
discussions if such Board of Directors, after having consulted with and
considered the advice of outside counsel, has determined that the failure to do
the same would constitute a breach of fiduciary duties of such directors under
applicable Delaware law. Seller will promptly inform Buyer orally and in writing
of any such request for information or of any such negotiations or discussions,
as well as instruct its and its Subsidiaries' directors, officers,
representatives and agents to refrain from taking any action prohibited by this
Section 5.7(a).
(b) In the event that the Board of Directors of Seller
believes in good faith, after consultation with its financial advisor and
outside counsel, that it has received a Superior Offer, it shall notify Buyer in
writing of its intent to terminate this Agreement. Such notice shall specify all
of the terms and conditions of such Superior Offer and identify the person
making such Superior Offer. Buyer shall have two business days to evaluate and
respond to the Seller notice. If Buyer does not agree in writing prior to the
expiration of the two business day period provided above to increase the Merger
Consideration to an amount at least equal to that of such Superior Offer (the
"New Merger Consideration"), then Seller shall be permitted to terminate this
Agreement pursuant
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to Section 7.1(g). In the event that Buyer does provide written notice to Seller
to increase the Merger Consideration to the New Merger Consideration, such
written notice shall constitute a contractual offer by Buyer ("Buyer's
Proposal") which shall be deemed accepted by Seller unless rejected by Seller as
set forth in Section 5.7(d) below. Seller shall have two business days to
evaluate Buyer's Proposal.
(c) In the event the Superior Offer involves consideration to
Seller's shareholders consisting of securities, in whole or in part, the New
Merger Consideration shall be deemed to be at least equal to the Superior Offer,
if Buyer's Proposal offers cash consideration that equals or exceeds the
consideration being offered to Seller's shareholders in the Superior Offer
valuing any securities forming a part of the Superior Offer at its cash
equivalent based upon (i) the average trading price of such securities for the
20 trading days immediately preceding the date of Buyer's Proposal or (ii) the
written valuation of such securities by a nationally recognized investment
banking firm selected by Buyer if such securities are not traded on a nationally
recognized exchange or will be newly issued securities that are not of a class
then trading on a nationally recognized exchange. Any written valuation shall be
attached as an Exhibit to Buyer's Proposal.
(d) In the event that the Board of Directors of Seller
believes in good faith, after consultation with its financial advisor, that the
New Merger Consideration is not at least equal to the Superior Offer, then
Seller can terminate this Agreement pursuant to Section 7.1(g).
5.8 Current Information. During the period from the date hereof to the
Effective Time, Seller shall, upon the request of Buyer, cause one or more of
its designated representatives to confer on a monthly or more frequent basis
with representatives of Buyer regarding Seller's consolidated financial
condition, operations and business and matters relating to the completion of the
Transactions. As soon as reasonably available, but in no event more than two
business days after filing, Seller will deliver to Buyer all reports filed by it
under the Exchange Act subsequent to the date hereof. Seller also will deliver
to Buyer each call report or similar report filed by it or Seller Bank with the
FDIC or the OTS concurrently with the filing of such call report. Within 25 days
after the end of each month, Seller will deliver to Buyer an unaudited
consolidated balance sheet and an unaudited consolidated statement of income,
without related notes, for such month prepared in accordance with GAAP.
5.9 Indemnification; Insurance.
(a) From and after the Effective Time, the past and present
directors and officers of Seller and its Subsidiaries (the "Indemnified
Parties") shall be entitled to indemnification from Parent or Buyer as set forth
below. If the Indemnified Party is a past or present director or officer of
Seller, such Indemnified Party shall be indemnified by Parent for his or her
past acts or omissions occurring prior to the Effective Time to the same extent
that he or she is indemnified under the Certificate of Incorporation or Bylaws
of Seller as in effect on the date of this Agreement. If the Indemnified Party
is a past or present director or officer of a Seller Subsidiary including Seller
Bank, such Indemnified Party shall be indemnified by Buyer for his or her past
acts or omissions occurring prior to the Effective Time to the maximum extent
permitted by Buyer's Charter and Bylaws subject to any restrictions imposed by
applicable law or regulation. The foregoing indemnification shall remain in
effect for a period of six years following the Effective Time. Buyer or Parent
will provide,
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or cause to be provided, for a period of not less than three years from the
Effective Time, an insurance and indemnification policy that provides to those
officers and directors of Seller and its Subsidiaries immediately prior to the
Effective Time coverage no less favorable than as currently provided by Seller
to such officers and directors, to the extent such insurance may be purchased or
kept in full force without any material increase in the cost of the premium
currently paid by Buyer for its directors' and officers' liability insurance
(provided, Buyer or Parent may substitute or cause Seller to substitute therefor
to the extent available at a cost not in excess of 150% of the current annual
premium cost of Seller's existing directors and officers' insurance, single
premium tail coverage with policy limits equal to Seller's existing annual
coverage limits). At the request of Buyer, Seller shall use reasonable efforts
to procure the insurance coverage referred to in the preceding sentence prior to
the Effective Time.
(b) To induce Seller to enter into this Agreement, Parent has
agreed to execute this Agreement as an accommodation party for the sole purpose
of agreeing to be bound by the terms of this Section 5.9.
(c) In the event that Parent or Buyer or any of its respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case the successors
and assigns of such entity shall assume the obligations set forth in this
Section 5.9, which obligations are expressly intended to be for the irrevocable
benefit of, and shall be enforceable by, each director and officer covered
hereby.
5.10 Early Completion of Bank Merger. If the Bank Merger shall be
completed prior to March 17, 2002, then at or immediately prior to consummation
of the Bank Merger Lawrence Seidman shall be elected as a director of Buyer for
a term ending as of the close of business on March 17, 2002.
5.11 Employees and Employee Benefit Plans.
(a) Except as otherwise provided herein, full time employees
of Seller and Seller Bank who remain employed by Buyer after the Effective Time
will be eligible to participate in benefit plans of Buyer that are generally
available to its full-time employees on a uniform and non-discriminatory basis
in accordance with and subject to the terms and provisions of such benefit
plans, with credit for years of service with Seller or Seller Bank for the
purpose of determining eligibility for participation, vesting and entitlement to
vacation time and sick pay (but not for the purpose of accrual or restoration of
benefits under any existing or future benefit plan of Buyer where benefits are
calculated on an actuarial basis, including any qualified or non-qualified
defined benefit plan or restoration plan). Contributions to (and accrual of
benefits, to the extent applicable, if any, under) benefit plans of Buyer on
behalf of continuing full-time employees of Seller and Seller Bank shall only
relate to qualifying compensation earned by such employees after the Effective
Time subject to the terms and provisions of such benefit plans. Notwithstanding
anything contained above, continuing full time employees of Seller and Seller
Bank (i) shall not be entitled to any past service credit for their prior
employment for any purposes whatsoever with respect to any post-
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termination or post-retirement welfare benefits of Buyer; and (ii) shall not be
eligible to participate in the Buyer benefit restoration plan or any qualified
plan of Buyer or any of its Subsidiaries (other than the 401(k) plan of Buyer
into which the Seller Bank 401(k) plan has been merged) until the entry date
occurring on April 1, 2003. Buyer shall use its best efforts to cause any and
all pre-existing condition limitations (to the extent such limitations did not
apply to a pre-existing condition under the corresponding Seller group health
plan) and eligibility waiting periods under its group health plans to be waived
with respect to such participants and their eligible dependents.
(b) To the extent that Buyer terminates the employment of any
full time employee of Seller or Seller Bank other than for Cause within six
months following the Effective Time, Buyer shall, provide severance benefits in
a cash amount equal to such employee's regular salary for a one-week period (as
in effect immediately prior to the Effective Time) multiplied by the total
number of whole years of such employee's employment (up to a maximum of eight
years) at Seller or Seller Bank; provided, however that in no event shall Buyer
have any obligation to provide severance benefits to any Seller or Seller Bank
employee whose termination of employment occurs due to resignation or discharge
for Cause or who is entitled to severance benefits or the equivalent thereof
under the terms of any other compensation plan or individual contract with
Seller or Seller Bank.
(c) Buyer agrees to honor the payout terms of all Previously
Disclosed employment, change in control severance, deferred compensation and
supplemental executive retirement agreements. Buyer agrees to expressly assume
every such agreement which by its terms requires express assumption by a
successor to Buyer. Such express assumption shall occur without further action
by Buyer upon the completion of the Corporate Merger. On or before the Effective
Time, Seller or Seller Bank shall payout to each director of the Seller or
Seller Bank any amounts deferred under the Seller's directors' deferred
compensation agreements.
(d) Payments made by Seller in full and complete satisfaction
of obligations of Seller or Seller Bank under any Seller Employee Plan or under
any agreement referred to in Section 5.11(b) or (c) shall be subject to the
recipient's delivery to Seller or Buyer of (i) a written acknowledgment signed
by such recipient that the payment or payments and benefits to be made to him or
her is in full and complete satisfaction of all liabilities and obligations
thereunder of Seller, Seller Bank and/or Buyer, and each of their respective
affiliates, directors, officers, employees and agents, and (ii) a release by
such recipient of all such parties from further liability in connection with the
particular Seller Employee Plan or agreement, as applicable.
(e) As of the Effective Time, the Seller ESOP shall be
terminated in accordance with its terms. Prior to the Effective Time, the Seller
shall be permitted to make such changes to the Seller ESOP as it deems
appropriate to carry out the provisions of this subsection and shall file a
request for determination with the IRS with respect to the termination of the
Seller ESOP. Any cash received by the Seller ESOP trustee in connection with the
Corporate Merger with respect to the unallocated shares of Seller Common Stock
shall be first applied by the Seller ESOP trustee to the full repayment of the
Seller ESOP loan. The balance of the cash (if any) received by the Seller ESOP
trustee in connection with the Corporate Merger with respect to the unallocated
shares of Seller Common Stock shall be allocated to the accounts of all
participants in the Seller ESOP who have accounts remaining under the Seller
ESOP (whether or not such participants are then actively
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employed) and beneficiaries in proportion to the account balances of such
participants and beneficiaries as they exist as of the Effective Time as
earnings, unless otherwise required to be allocated as annual additions subject
to the limitations of Section 415 of the Code. As soon as practicable after
receipt of a favorable determination letter from the IRS with respect to
termination, the assets of the Seller ESOP shall be distributed to participants
and beneficiaries or transferred to an eligible individual retirement account as
a participant or beneficiary may direct. Neither Seller nor any Seller
Subsidiary shall be entitled to make any contributions to the Seller ESOP or
payments on the Seller ESOP loan, except required contributions and payments for
calendar year 2001. At no time shall Seller or any Seller Subsidiary make any
prepayments on the Seller ESOP loan.
(f) At the Effective Time, the Seller Bank 401(k) plan shall
be continued in effect, provided that Buyer may elect to terminate the Seller
Bank 401(k) plan or merge it with a tax-qualified plan maintained by Buyer; and
provided further, that at the request of Buyer, Seller shall cause the Seller
Bank 401(k) plan to be terminated at or immediately prior to the Effective Time
in accordance with applicable law and in a manner that will not result in the
imposition of any liability or responsibility upon Buyer or any of its
Subsidiaries.
5.12 Organization of Merger Sub. Buyer shall cause Merger Sub to be
organized under the DGCL as soon as practicable hereafter. Following the
organization, the Board of Directors of Merger Sub shall approve this Agreement
and the Corporate Merger, whereupon Merger Sub shall become a party to, and be
bound by, this Agreement, and Buyer shall approve this Agreement in its capacity
as the sole stockholder of Merger Sub.
5.13 Conforming Entries.
(a) The Parties recognize that Buyer and Seller Bank may have
adopted different loan, accrual and reserve policies (including loan
classifications and levels of reserves for possible loan losses). Subject to
applicable laws, from and after the date of this Agreement to the Effective
Time, the Parties shall consult and cooperate with each other with respect to
conforming the loan, accrual and reserve policies of Seller Bank to those
policies of Buyer, as specified in each case in writing to Seller, based upon
such consultation and subject to the conditions in Section 5.13(c) below.
(b) Subject to applicable laws and regulations, the Parties
shall consult and cooperate with each other with respect to determining, as
specified in a written notice from Buyer to Seller, based upon such consultation
and subject to the conditions in Section 5.13(c) below, the amount and the
timing for recognizing for financial accounting purposes Seller's expenses of
the Transactions and the restructuring charges relating to or to be incurred in
connection with the Transactions.
(c) Subject to applicable laws and regulations, Seller shall
(i) establish and take such reserves and accruals at such time as Buyer shall
reasonably request to conform Seller Bank's loan, accrual and reserve policies
to Buyer's policies, and (ii) establish and take such accruals, reserves and
charges in order to implement such policies and to recognize for financial
accounting purposes such expenses of the Transactions and restructuring charges
related to or to be incurred in
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connection with the Transactions, in each case at such times as are reasonably
requested by Buyer; provided, however, that on the date such reserves, accruals
and charges are to be taken, Buyer shall certify to Seller that all conditions
to Buyer's obligation to consummate the Corporate Merger set forth in Sections
6.1 and 6.3 hereof (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing or otherwise to be
dated at the Effective Time, the delivery of which shall continue to be
conditions to Buyer's obligation to consummate the Corporate Merger) have been
satisfied or waived; and provided, further, that Seller shall not be required to
take any such action that is not consistent with GAAP and regulatory accounting
principles.
(d) No reserves, accruals or charges taken in accordance with
this Section 5.13 may be a basis to assert a violation of a breach of a
representation, warranty or covenant of Seller herein.
5.14 Integration of Policies. During the period from the date hereof to
the Effective Time, Seller shall cause its and Seller Bank's directors, officers
and employees to, and shall make all reasonable efforts to cause Seller Bank's
data processing service providers to, cooperate and assist Buyer in connection
with an electronic and systematic conversion of all applicable data regarding
Seller Bank to Buyer's system of electronic data processing. In furtherance of
the foregoing, Seller shall cause Seller Bank to make reasonable arrangements
during normal business hours to permit representatives of Buyer to train Seller
Bank employees in Buyer's system of electronic data processing.
5.15 Disclosure Supplements. From time to time prior to the Effective
Time, each Party shall promptly supplement or amend any materials Previously
Disclosed and delivered to the other Party pursuant hereto with respect to any
matter hereafter arising which, if existing, occurring or known at the date of
this Agreement, would have been required to be set forth or described in
materials Previously Disclosed to the other Party or which is necessary to
correct any information in such materials which has been rendered materially
inaccurate thereby. No such supplement or amendment to such materials shall be
deemed to have modified the representations, warranties and covenants of the
parties for the purpose of determining whether the conditions set forth in
Article VI hereof have been satisfied.
5.16 Failure to Fulfill Conditions. If a Party determines that a
condition to its obligations to consummate the Transactions may not be
fulfilled, it will promptly notify the other Party. Each Party will promptly
inform the other Party of any facts applicable to it that would be likely to
prevent or materially delay approval of any of the Transactions by any
Governmental Entity or third party or which would otherwise prevent or
materially delay completion of any of the Transactions.
5.17 Environmental Reports. Unless Buyer provides Seller with a reduced
list of real properties within ten days after the date of this Agreement, Seller
shall provide to Buyer, as soon as reasonably practical, but not later than 30
days after the date hereof (or within ten days after the acquisition of lease of
any real property acquired or leased after the date hereof), a report of a phase
one environmental investigation on real property owned or leased by Seller or
its Subsidiaries (but excluding space in office or retail and similar
establishments leased by Seller or its subsidiaries for
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automatic teller machines or bank branch facilities or other office uses where
the space leased comprises less than 20% of the total space leased to all
tenants of such property). If required by the phase one investigation in Buyer's
reasonable opinion, Seller shall provide to Buyer, within 60 days of the receipt
by Seller of the request of Buyer therefor, a report of a phase two
investigation on properties requiring such additional study. Buyer shall have
seven business days from receipt of any phase one investigation report to
request Seller to obtain a phase two investigation report with respect to such
real property. Buyer shall have seven business days from the receipt of any such
phase two investigation report to notify Seller of any dissatisfaction with the
contents of such report. Should the cost of taking all remedial or other
corrective actions and measures (i) required by applicable law or reasonably
likely to be required by applicable law, or (ii) recommended or suggested by
such report or reports or prudent in light of serious life, health or safety
concerns, in the aggregate, exceed the sum of $500,000 as reasonably estimated
by an environmental expert retained for such purpose by Buyer and reasonably
acceptable to Seller, or if the cost of such actions and measures cannot be so
reasonably estimated by such expert to be such amount or less with any
reasonable degree of certainty, then Buyer shall have the right pursuant to
Section 7.1(h) hereof, for a period of ten business days following receipt of
such estimate or indication that the cost of such actions and measures can not
be so reasonably estimated, to terminate this Agreement, which shall be Buyer's
sole remedy in such event. The costs of the phase one investigations, if any,
shall be borne by Seller. The costs of the phase two investigations, if any,
shall be borne by Buyer.
5.18 Litigation Matters. Seller will consult with Buyer about any
proposed settlement, or any disposition of, any litigation to which Seller or
any of its Subsidiaries is a party.
5.19 Liquidated Damages. Due to expenses, direct and indirect, incurred
by Buyer in negotiating and executing this Agreement and in taking steps to
effect the Transactions, the loss by it of other opportunities, and as material
inducement for Buyer agreeing to enter into this Agreement, Seller shall pay to
Buyer, agreed upon cash liquidated damages of three million dollars, within five
business days after written demand for payment is made by Buyer, following the
occurrence of any of the events set forth below:
(a) Buyer terminates this Agreement pursuant to Section
7.1(f);
(b) Seller terminates this Agreement pursuant to Section
7.1(g);
(c) either Party terminates this Agreement pursuant to Section
7.1(e) if prior thereto Seller's shareholders meeting has not been held to vote
on the adoption of this Agreement; or
(d) the entering into a definitive agreement by Seller or
Seller Bank relating to an Acquisition Proposal or the consummation of an
Acquisition Proposal involving Seller or Seller Bank within 18 months after the
termination of this Agreement if (i) an Acquisition Proposal occurs prior to the
applicable event described in subpart (ii) hereof and (ii) either of the
following occurs: (x) the termination of this Agreement by Buyer pursuant to
Section 7.1(b) or (y) the failure of the shareholders of Seller to adopt this
Agreement at the Seller's shareholders meeting held to vote on this Agreement.
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If demand for payment of cash liquidated damages is made pursuant to
this Section 5.19 and payment is timely made, then Buyer will have any other
rights or claims against Seller under this Agreement, it being agreed that the
acceptance of cash liquidated damages under this Section 5.19 will constitute
the sole and exclusive remedy of Buyer against Seller.
5.20 Sale of Loans by Seller Bank. At any time prior to the Closing,
Seller and Seller Bank shall be permitted to sell, assign, convey, transfer or
dispose of, in the ordinary course of business those Previously Disclosed loans
(including Previously Disclosed approved loans which subsequently close) of
Seller Bank's New Jersey Loan Production Office for a cash purchase price for
each applicable loan equal to its unpaid principal balance plus accrued
interest. To the extent that any such loans have not been sold at the Effective
Time, then Lawrence Seidman shall have the right during the eighteen month
period next following the Effective Time (but excluding any period during which
he is a director of Buyer) to purchase any of such remaining loans for a cash
purchase price for each applicable loan equal to its unpaid principal balance
plus accrued interest.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - The Parties. The obligations of each Party
to effect the Corporate Merger shall be subject to satisfaction of the following
conditions at or prior to the Effective Time.
(a) The adoption of this Agreement by the requisite vote
of the shareholders of Seller.
(b) All approvals and consents from any Governmental
Entity the approval or consent of which is required for the completion of the
Transactions shall have been received and all statutory waiting periods in
respect thereof shall have expired; and the Parties shall have procured all
other approvals, consents and waivers of each person (other than the
Governmental Entities referred to above) whose approval, consent or waiver is
necessary to the completion of the Transactions and the failure of which to
obtain would have the effects set forth in the following proviso clause;
provided, however, that no approval or consent referred to in this Section
6.1(b) shall be deemed to have been received if it shall include any condition
or requirement that, in the aggregate, would so materially reduce the economic
or business benefits of the Transactions to Buyer that had such condition or
requirement been known, Buyer, in its reasonable judgment, would not have
entered into this Agreement.
(c) None of Buyer, Seller or Seller Bank shall be
subject to any statute, rule, regulation, injunction or other order or decree
which shall have been enacted, entered, promulgated or enforced by any
governmental or judicial authority which prohibits, restricts or makes illegal
completion of the Transactions.
(d) No proceeding initiated by any Governmental Entity
seeking an order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing the
completion any of the Transactions shall be pending.
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6.2 Conditions Precedent - Seller. The obligations of Seller to effect
the Corporate Merger shall be subject to satisfaction of the following
conditions at or prior to the Effective Time unless waived by Seller pursuant to
Section 7.4 hereof.
(a) The representations and warranties of Buyer set forth
in Article IV hereof shall be true and correct in all material respects as of
the date of this Agreement and such representations and warranties shall,
subject to the MAE Qualification, be true and correct as of the Closing Date as
though made anew on and as of the Closing Date, unless the representation and
warranty specifically relates to an earlier date.
(b) Buyer shall have performed in all material respects
all obligations and complied with all covenants required to be performed and
complied with by it pursuant to this Agreement on or prior to the Effective
Time.
(c) Buyer shall have delivered to Seller a certificate,
dated the date of the Closing and signed by its President and Chief Executive
Officer and by its Chief Financial Officer, to the effect that the conditions
set forth in Sections 6.2(a) and 6.2(b) have been satisfied.
(d) Buyer shall have furnished Seller with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 6.1 and 6.2 as such
conditions relate to Buyer as Seller may reasonably request.
(e) Seller shall have received, as of the date of the Proxy
Statement, or as of a date not more than five business days prior thereto, an
updated written opinion of its financial advisor that the consideration to be
received by the shareholders of Seller in the Corporate Merger is fair from a
financial point of view.
6.3 Conditions Precedent - Buyer. The obligations of Buyer to effect
the Corporate Merger shall be subject to satisfaction of the following
conditions at or prior to the Effective Time unless waived by Buyer pursuant to
Section 7.4 hereof.
(a) The representations and warranties of Seller set forth in
Article III hereof shall be true and correct in all material respects as of the
date of this Agreement and such representations and warranties shall, subject to
the MAE Qualification, be true and correct as of the Closing Date as though made
anew on and as of the Closing Date, unless the representation and warranty
specifically relates to an earlier date.
(b) Seller shall have performed in all material respects all
obligations and complied with all covenants required to be performed and
complied with by it pursuant to this Agreement on or prior to the Effective
Time.
(c) Seller shall have delivered to Buyer a certificate, dated
the date of the Closing and signed by its President and Chief Executive Officer
and by its Chief Financial Officer, to the effect that the conditions set forth
in Sections 6.3(a) and 6.3(b) have been satisfied.
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(d) Seller shall have furnished Buyer with such certificates
of its officers or others and such other documents to evidence fulfillment of
the conditions set forth in Sections 6.1 and 6.3 as such conditions relate to
Seller as Buyer may reasonably request.
(e) No more than 10% of the outstanding shares of Seller
Common Stock shall be Dissenting Shares.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination. This Agreement may be terminated by a written
instrument prior to the Effective Time:
(a) by the mutual consent of the Boards of Directors of the
Parties;
(b) by the Board of Directors of the non-breaching Party if
the other Party has breached in any material respect any of its covenants,
agreements or representations and warranties, and such breach has not been cured
within 30 days after written notice;
(c) by the Board of Directors of either Party, (i) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order prohibiting the completion of the Transactions or (ii) if
application for any necessary prior approval of a Governmental Entity is denied
or withdrawn at the request or recommendation of the Governmental Entity,
provided that such denial or request or recommendation for withdrawal is not due
to the terminating Party's breach of any provision of this Agreement;
(d) by the Board of Directors of either Party if the
shareholders of Seller fail to adopt this Agreement at Seller's shareholders
meeting held to vote on this Agreement;
(e) by the Board of Directors of either Party if the Effective
Time has not occurred by the close of business on June 30, 2002, provided that
the terminating Party is not then in breach in any material respect of any of
its covenants, agreements or representations and warranties herein;
(f) by the Board of Directors of Buyer if Seller's Board of
Directors either (i) fails to recommend, or fails to continue its
recommendation, that the shareholders of Seller vote in favor of the adoption of
this Agreement, or (ii) modifies, withdraws or changes in any manner adverse to
Buyer its recommendation that the shareholders of Seller vote in favor of the
adoption of this Agreement, unless the shareholders of Seller adopt this
Agreement;
(g) by the Board of Directors of Seller within ten business
days after Seller has received a Superior Offer if either of the following shall
have occurred: (i) Buyer does not timely tender Buyer's Proposal increasing the
Merger Consideration to the New Merger Consideration or (ii) Buyer does timely
tender Buyer's Proposal but the Board of Directors of Seller determines pursuant
to Section 5.7(d) that the New Merger Consideration is not at least equal to the
Superior Offer; or
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(h) by the Board of Directors of Buyer to the extent permitted
by Section 5.17.
Any termination of this Agreement by Buyer pursuant to Section 7.1(f)
shall be controlling over any termination by Seller pursuant to Section 7.1(d),
in which case the termination by Seller pursuant to said Section 7.1(d) shall be
disregarded.
7.2 Effect of Termination. In the event that this Agreement is
terminated pursuant to Section 7.1 hereof, this Agreement shall become void and
have no effect, except that (A) the provisions relating to confidentiality set
forth in Section 5.4(b), liquidated damages set forth in Section 5.19, expenses
set forth in Section 8.1 and this Section 7.2, shall survive any such
termination and (b) a termination pursuant to Section 7.1(b) shall not (except
as provided in Section 5.19) relieve the breaching Party from any liability or
damages arising out of its willful breach of any provision of this Agreement
giving rise to such termination.
7.3 Survival of Representations, Warranties and Covenants. All
representations, warranties, agreements and covenants in this Agreement or in
any instrument delivered pursuant hereto or thereto shall expire on, and be
terminated and extinguished at, the Effective Time other than covenants that by
their terms are to be performed after the Effective Time, provided that no such
representations, warranties or covenants shall be deemed to be terminated or
extinguished so as to deprive either Party (or any director, officer or
controlling person of either Party) of any defense at law or in equity which
otherwise would be available against the claims of any person, including any
shareholder or former shareholder of either Party.
7.4 Waiver. Each Party by written instrument approved by its Board of
Directors and signed by an executive officer of such Party, may at any time
(whether before or after adoption of this Agreement by the shareholders of
Seller) extend the time for the performance of any of the obligations or other
acts of the other Party hereto and may waive (a) any inaccuracies of the other
Party in the representations or warranties contained in this Agreement or any
document delivered pursuant hereto, (b) compliance with any of the covenants,
undertakings or agreements of the other Party, (c) to the extent permitted by
law, satisfaction of any of the conditions precedent to its obligations
contained herein or (d) the performance by the other Party of any of its
obligations set forth herein, provided that any such waiver granted, or any
amendment or supplement pursuant to Section 7.5 hereof executed after
shareholders of Seller have adopted this Agreement, shall not modify either the
amount or form of the consideration to be provided hereby to the holders of
Seller Common Stock upon completion of the Corporate Merger or otherwise
materially adversely affect such shareholders without the approval of the
shareholders who would be so affected.
7.5 Amendment or Supplement. This Agreement may be amended or
supplemented at any time by mutual agreement of the parties hereto, subject to
the proviso to Section 7.4 hereof. Any such amendment or supplement must be in
writing and authorized by or under the direction of the Board of Directors of
each of the Parties.
7.6 Specific Performance. Except as set forth at Section 5.19, the
Parties acknowledge and agree that the Transactions contemplated herein are
unique and that any remedy at law for breach is inadequate to compensate the
aggrieved Party. Accordingly, each Party shall have the right to seek
A-39
specific performance of this Agreement and the other Party's duties,
obligations, covenants and agreements herein in order to cause the Transactions
to be consummated. To this end, each Party, to the extent permitted by law,
irrevocably waives any defense it might have based on the adequacy of a remedy
at law which might be asserted as a bar to specific performance or any other
equitable relief.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses. Each Party shall bear and pay all costs and expenses
incurred by it in connection with the Transactions, including fees and expenses
of its own financial advisors, accountants and counsel.
8.2 Entire Agreement. This Agreement contains the entire agreement
among the Parties with respect to the Transactions and supersede all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the Parties and their respective
successors. Nothing in this Agreement, expressed or implied, is intended to
confer upon any person, other than the Parties, and their respective successors,
any rights, remedies, obligations or liabilities other than as set forth in
Sections 5.9, 5.11, and 5.20 hereof.
8.3 No Assignment. No Party may assign any of its rights or obligations
under this Agreement.
8.4 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally,
telecopied (with confirmation) or sent by overnight mail service or by
registered or certified mail (return receipt requested), postage prepaid,
addressed as follows:
If to Buyer:
Hudson River Bancorp, Inc.
One Hudson City Center
Hudson, New York 12534
Attn: Carl A. Florio
Fax: (518) 828-0082
With a required copy to:
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Washington, DC 20005
Attn: Robert L. Freedman, P.C. or
Barry P. Taff, P.C.
Fax: (202) 682-0354
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If to Seller:
Ambanc Holding Co., Inc.
11 Division Street
Amsterdam, New York 12010
Attn: John M. Lisicki
Fax: (518) 843-7181
With a required copy to:
Malizia Spidi & Fisch, PC
1100 New York Avenue, N.W.
Suite 340, West Tower
Washington, D.C. 20005
Attn: John J. Spidi, Esq.
Fax: (202) 434-4661
8.5 Alternative Structure. Notwithstanding any provision of this
Agreement to the contrary, Buyer may at any time modify the structure of the
acquisition of Seller set forth herein, provided that (a) the consideration to
be paid to the holders of Seller Common Stock is not thereby changed in kind or
reduced in amount as a result of such modification and (b) such modification
will not materially delay or jeopardize receipt of any required approvals of
Governmental Entities or any other condition to the obligations of Buyer set
forth in Sections 6.1 and 6.3 hereof.
8.6 Interpretation. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
8.7 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.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to agreements made
and entirely to be performed within such jurisdiction.
8.9 Severability. Any term, provision, covenant or restriction
contained in this Agreement held to be invalid, void or unenforceable, shall be
ineffective to the extent of such invalidity, voidness or unenforceability, but
neither the remaining terms, provisions, covenants or restrictions contained in
this Agreement nor the validity or enforceability thereof in any other
jurisdiction shall be affected or impaired thereby. Any term, provision,
covenant or restriction contained in this Agreement that is so found to be so
broad as to be unenforceable shall be interpreted to be as broad as is
enforceable.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed in counterparts by their duly authorized officers and attested by their
officers thereunto duly authorized, all as of the day and year first above
written.
AMBANC HOLDING CO., INC.
Attest:
/s//Robert Kelly By: /s/John M. Lisicki
-------------------------- ------------------------------------------
Secretary President
HUDSON RIVER BANK & TRUST COMPANY
Attest:
/s/Holly E. Rapplayea By: /s/Carl A. Florio
-------------------------- ------------------------------------------
Secretary President
To induce Ambanc Holding Co., Inc. to enter into the foregoing
agreement, the undersigned does hereby agree to be bound by the terms of Section
5.9 of the foregoing agreement as such terms are applicable to it; and the
undersigned certifies that it has taken all necessary corporate action to
approve the execution and delivery of this undertaking by it and the performance
thereof by it and that no other approvals or consents are required on its part
relative thereto.
HUDSON RIVER BANCORP, INC.
By: /s/Carl A. Florio
------------------------------------------
President
Date: September 4, 2001
------------------------------------------
A-42
APPENDIX B
November 2, 2001
Board of Directors
Ambanc Holding Co., Inc.
Mohawk Community Bank
11 Division Street
Amsterdam, NY 12010
Members of the Board:
Ambanc Holding Co., Inc. ("Ambanc") has requested our written opinion,
as an independent financial advisor to Ambanc and its wholly owned subsidiary
Mohawk Community Bank ("Mohawk"), Amsterdam, New York as to the fairness, from a
financial point of view to the common shareholders of Ambanc, of the merger
consideration proposed in the Agreement and Plan of Merger dated September 4,
2001 (the "Agreement"), pursuant to which Ambanc will be acquired by Hudson
River Bancorp, Inc. ("Hudson River"), Hudson, New York.
Pursuant to the Agreement and discussions with management, 100% of the
issued and outstanding shares of Ambanc common stock will be acquired for $21.50
in cash (the "Merger Consideration") by Hudson River. The Merger Consideration
may be taxable to Ambanc shareholders.
FinPro, Inc. ("FinPro") provides investment-banking services to the
bank and thrift industry, including appraisals and valuations of bank and thrift
institutions and their securities in connection with mergers, acquisitions,
public offerings and other securities transactions. FinPro has knowledge of and
experience with the New York bank and thrift market and financial institutions
operating in that market. The Ambanc Board chose FinPro because of its
expertise, experience and familiarity with the bank and thrift industries.
In connection with its opinion, FinPro reviewed and considered, among
other things:
(i) the Agreement and the exhibits thereto;
(ii) changes in the market for bank and thrift stocks;
(iii) the performance of Ambanc's and Hudson River's common
stock;
(iv) trends and changes in the financial condition of Ambanc
and Hudson River;
(v) the level of nonperforming loans and corresponding
level of the loan loss allowance of Ambanc and Hudson
River;
(vi) the most recent annual report to shareholders and
annual report on Form 10-K of Ambanc and Hudson River;
(vii) quarterly reports on Form 10-Q of Ambanc and Hudson
River;
(viii) the budget of Ambanc;
B-1
Ambanc Holding Company, Inc.
Page 2
(ix) KPMG's most recent audit letter to Hudson River;
(x) recent regulatory exam reports of Hudson River and its
subsidiaries; and
(xi) the minutes of meetings of the Board of Directors of
Hudson River for the past year.
In rendering its opinion, FinPro did not independently verify the
financial data provided by or on behalf of Ambanc and Hudson River, but instead
relied upon and assumed the accuracy and completeness of the data provided.
We have also had discussions with the management of Ambanc and Hudson
River regarding their respective financial results and have analyzed the most
current financial data available for Ambanc and Hudson River. We also considered
such other information, financial studies, analyses and investigations, and
economic and market criteria which we deemed relevant.
We have considered certain financial data of Ambanc and have compared
that data with similar data for other thrift institutions and their holding
companies which have recently merged or been acquired. Furthermore, we have
considered the financial terms of these business combinations involving said
thrift institutions and their holding companies.
In reaching our opinion, we took into consideration the financial
benefits of the proposed transaction to Ambanc shareholders. Based on all
factors that we deem relevant and assuming the accuracy and completeness of the
information and data provided to us by Ambanc and Hudson River, it is our
opinion as of this date, that the proposed Merger Consideration is fair and
equitable to Ambanc shareholders from a financial point of view.
Ambanc retained FinPro to act as independent financial advisor, to
render general advisory services and also to specifically advise Ambanc in
connection with its merger and acquisition activities. Pursuant to its
engagement, Ambanc will pay FinPro a transaction fee equal to 1.0 % of the
aggregate deal value of the consideration to be paid by Hudson River in the
Merger.
Prior to being retained as Ambanc's financial advisor, FinPro has
provided financial advisory and consulting services to Ambanc. The revenues
derived from these services are insignificant when compared to the firm's total
gross revenues.
Respectfully Submitted,
/s/FinPro, Inc.
-------------------------------------------
FinPro, Inc.
Liberty Corner, New Jersey
B-2
DELAWARE CODE ANNOTATED
TITLE 8. CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IX. MERGER, CONSOLIDATION OR CONVERSION
APPENDIX C
Section 262. Appraisal rights.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to Section 228
of this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to Sections 251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from such
merger or consolidation, or depository receipts in respect thereof;
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b. Shares of stock of any other corporation, or depository receipts in
respect thereof, which shares of stock (or depository receipts in respect
thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash
in lieu of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsection (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of
such stockholder's shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such stockholder's shares. A proxy or
vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand
as herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become effective;
or
(2) If the merger or consolidation was approved pursuant to Section 228
or Section 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation
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or within ten days thereafter, shall notify each of the holders of any class or
series of stock of such constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this
section; provided that, if the notice is given on or after the effective date of
the merger or consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of stock of a
constituent corporation that are entitled to appraisal rights. Such notice may,
and, if given on or after the effective date of the merger or consolidation,
shall, also notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may, within 20 days
after the date of mailing of such notice, demand in writing from the surviving
or resulting corporation the appraisal of such holder's shares. Such demand will
be sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within 10
days after such effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent corporation may
fix, in advance, a record date that shall be not more than 10 days prior to the
date the notice is given, provided, that if the notice is given on or after the
effective date of the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for
C-3
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The
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Court's decree may be enforced as other decrees in the Court of Chancery may be
enforced, whether such surviving or resulting corporation be a corporation of
this State or of any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of such
stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding
in the Court of Chancery shall be dismissed as to any stockholder without the
approval of the Court, and such approval may be conditioned upon such terms as
the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (Last amended by Ch.
339, L. '98 eff. 7-1-98).
C-5
AMBANC HOLDING CO., INC. Please mark your FOR
SPECIAL MEETING OF STOCKHOLDERS vote as in this [X]
example
The undersigned hereby appoints the Board of Directors of Ambanc
Holding Co., Inc. ("Ambanc"), and its successors, with full power of
substitution, to act as attorneys and proxies for the undersigned to vote all
shares of common stock of Ambanc which the undersigned is entitled to vote at
Ambanc's Special Meeting of Stockholders (the "Meeting'), to be held on Monday,
December 10, 2001, at our main office located at 11 Division Street, Amsterdam,
New York, at 1:00 p.m., local time, and at any and all adjournments and
postponements thereof as follows:
1. Approval of the Agreement and Plan of Merger, FOR AGAINST ABSTAIN
dated as of September 4, 2001, by and between [ ] [ ] [ ]
Hudson River Bank & Trust Company and
Ambanc Holding Co., Inc.
Your Board of Directors I plan to attend the Ambanc YES NO
recommends a vote "FOR" Special Meeting. [ ] [ ]
the proposal.
In their discretion, the proxies are authorized to vote on any other business
that may property come before the Special Meeting or any adjournment or
postponement thereof.
This Proxy will be voted as directed. If you date, sign and return this proxy
but do not provide specific voting instructions, this proxy will be voted FOR
Proposal 1. If any other business is presented at the Special Meeting, this
proxy will be voted by those named in this proxy in their best judgment. At the
present time, the Board of Directors knows of no other business to be presented
at the Special Meeting. The stockholder may revoke this proxy at any time before
it is voted.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned acknowledges receipt from Ambanc, prior to the
execution of this proxy, of Notice of the Special Meeting and the Proxy
Statement.
Dated:
------------------------- --------------------------------------------
Print Name of Stockholder(s)
-------------------------------- --------------------------------------------
Signature of Stockholder Signature of Stockholder
Please sign exactly as your name appears above on this form. When signing as
attorney, executor, administrator, trustee, guardian or corporate officer,
please give your full title. If shares are held jointly, each holder should
sign.
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PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
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