Exhibit C
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
dated as of March 18, 2004
between
Quaker City Bancorp, Inc.
and
Popular, Inc.
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TABLE OF CONTENTS
PAGE
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ARTICLE I
CERTAIN DEFINITIONS; INTERPRETATION
1.01 Certain Definitions...................................................1
1.02 Interpretation........................................................9
ARTICLE II
THE MERGER
2.01 The Merger............................................................9
2.02 Effective Time.......................................................10
2.03 Closing..............................................................10
2.04 The Bank Merger......................................................11
2.05 Reservation of Right to Revise Structure.............................11
ARTICLE III
CONSIDERATION
3.01 Effect on Capital Stock..............................................11
3.02 Rights as Stockholders; Stock Transfers..............................12
3.03 Payment for Shares...................................................12
3.04 Dissenting Stockholders..............................................13
3.05 Company Stock Options................................................13
ARTICLE IV
ACTIONS PENDING THE MERGER
4.01 Forbearances of the Company..........................................14
4.02 Forbearances of the Acquiror.........................................18
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules.................................................18
5.02 Standard.............................................................18
5.03 Representations and Warranties of the Company........................19
5.04 Representations and Warranties of the Acquiror.......................34
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ARTICLE VI
COVENANTS
6.01 Commercially Reasonable Efforts......................................36
6.02 Stockholder Approval.................................................36
6.03 Proxy Statement......................................................36
6.04 Press Releases.......................................................37
6.05 Access; Information..................................................37
6.06 Acquisition Proposals................................................38
6.07 Takeover Laws........................................................40
6.08 No Rights Triggered..................................................40
6.09 Regulatory Applications..............................................40
6.10 Indemnification......................................................40
6.11 Notification of Certain Matters......................................42
6.12 Employee Benefits....................................................43
6.13 Certain Adjustments..................................................44
6.14 Intentionally Omitted................................................45
6.15 Regulatory Compliance................................................45
6.16 Formation of Acquiror Sub............................................45
6.17 Fiscal 2004 Incentive Compensation...................................45
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger...........45
7.02 Conditions to Obligation of the Company..............................46
7.03 Conditions to Obligation of the Acquiror.............................47
ARTICLE VIII
TERMINATION
8.01 Termination..........................................................47
8.02 Effect of Termination and Abandonment................................48
8.03 Termination Fee......................................................49
ARTICLE IX
MISCELLANEOUS
9.01 Survival.............................................................52
9.02 Waiver; Amendment....................................................52
9.03 Counterparts.........................................................52
9.04 Governing Law........................................................52
9.05 Expenses.............................................................52
9.06 Notices..............................................................52
9.07 Entire Understanding; No Third-Party Beneficiaries...................54
9.08 Assignment...........................................................54
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9.09 Waiver of Jury Trial.................................................54
EXHIBIT A List of Persons to Execute Voting Agreements
EXHIBIT B Form of Voting Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of March 18, 2004 (this
"Agreement"), by and between Quaker City Bancorp, Inc. (the "Company") and
Popular, Inc. (the "Acquiror").
RECITALS
A. The Company. The Company is a Delaware corporation having its
principal place of business in Whittier, California.
B. The Acquiror. The Acquiror is a Puerto Rico corporation having its
principal place of business in San Xxxx, Puerto Rico.
C. Acquiror Sub. Acquiror Sub ("Acquiror Sub") will be a Delaware
corporation and a direct or indirect wholly owned subsidiary of Acquiror that
will have been organized as of the Closing Date for the purpose of effecting the
Merger in accordance with this Agreement.
D. The Merger. On the terms and subject to the conditions contained in
this Agreement, the parties to this Agreement intend to effect the merger of
Acquiror Sub with and into the Company, with the Company as the surviving
corporation.
E. Voting Agreements. The stockholders of the Company identified on
Exhibit A have agreed to execute a Voting and Support Agreement in substantially
the form of Exhibit B (the "Voting Agreement").
F. Board Action. The respective Boards of Directors of each of the
Company and the Acquiror have adopted resolutions approving this Agreement and
the transactions contemplated by this Agreement, in the case of the Company
Board, declaring the advisability of this Agreement in accordance with the
Delaware General Corporation Law (the "DGCL") and in furtherance of the
Company's business strategies and goals, and in the case of Acquiror Sub, its
Board of Directors will declare the advisability of this Agreement in accordance
with the DGCL in furtherance of Acquiror Sub's business strategy and goals.
NOW, THEREFORE, in consideration of the premises, and of the mutual
covenants, representations, warranties and agreements contained herein, the
parties agree as follows.
ARTICLE I
CERTAIN DEFINITIONS; INTERPRETATION
1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings assigned below:
"401(k) Plan" means the Quaker City Bancorp, Inc. Savings 401(k) Plan,
as amended.
"Acquiror" has the meaning assigned in the preamble to this Agreement.
"Acquiror Sub" has the meaning assigned in Recital C.
"Acquiror Subsidiary" has the meaning assigned in Section
8.03(a)(i)(2).
"Acquisition Proposal" has the meaning assigned in Section 6.06.
"Acquisition Transaction" means (x) a merger or consolidation, or any
similar transaction, involving the Company or any of its Subsidiaries, provided,
however, that in no event shall any merger, consolidation or similar transaction
involving only the Company and one or more of its Subsidiaries or involving only
any two or more of such Subsidiaries, if such transaction is not otherwise in
violation of the terms of this Agreement, be deemed to be an Acquisition
Transaction, (y) a purchase, lease or other acquisition of twenty-five percent
(25%) or more of the assets, deposits or business operations of the Company or
any of its Subsidiaries, or (z) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of securities
representing fifteen percent (15%) or more of the voting power of the Company or
any of its Subsidiaries.
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Applicable Law" means, with respect to the conduct of a business,
applicable federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto or to the
employees conducting such businesses, including applicable fair lending laws and
other laws relating to discriminatory business practices, laws relating to
consumer lending and other consumer business practices, privacy laws, the USA
PATRIOT Act of 2001, the International Money Laundering Abatement and
Anti-Terrorist Financing Act of 2001, supervisory guidance relating to credit
card operations, and the Xxxxxxxx-Xxxxx Act of 2002, in each case as in effect
and applicable to such business.
"Bank" has the meaning assigned in Section 2.04.
"Bank Merger" has the meaning assigned in Section 2.04.
"beneficial ownership" has the meaning assigned thereto in Rule 13d-3
promulgated under the Exchange Act.
"business day" means any day that is not a Saturday, a Sunday or other
day on which the offices of the Secretary of State of the States of Delaware or
California are closed, and, in addition, only in the case of any performance or
notice to or consent by the Acquiror as provided for in this Agreement, any day
on which the Secretary of State of the Commonwealth of Puerto Rico is closed.
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"Bylaws" has the meaning assigned in Section 2.01(c).
"Cash Balance Plan" means the Quaker City Bank Employees' Retirement
Income Plan, as amended and restated effective as of January 1, 2000.
"Certificate of Incorporation" has the meaning assigned in Section
2.01(b).
"CIC Benefits Continuation" has the meaning assigned in Section
6.12(e).
"Closing Date" has the meaning assigned in Section 2.02.
"COBRA" has the meaning assigned in Section 6.12(e).
"Code" means the Internal Revenue Code of 1986.
"Company" has the meaning assigned in the preamble to this Agreement.
"Company Board" means the Board of Directors of the Company.
"Company Common Stock" means the common stock, par value $0.01 per
share, of the Company.
"Company IP Rights" has the meaning assigned in Section 5.03(x).
"Company Meeting" has the meaning assigned in Section 6.02.
"Company Preferred Stock" means the preferred stock, par value $0.01
per share, of the Company.
"Company Related Person" means any person (or family member of such
person) (1) that directly or indirectly controls the Company, (2) that serves as
a director, officer, employee, partner, member, executor, or trustee of the
Company or any of its affiliates or Subsidiaries (or in any other similar
capacity), (3) that has, or is a member of a group having, direct or indirect
beneficial ownership of voting securities or other voting interests representing
at least five (5) percent of the outstanding voting power or equity securities
or other equity interests representing at least five (5) percent of the
outstanding equity interests (a "Material Interest") in the Company or any of
its affiliates or (4) in which any person (or family member of such person) that
falls under (1), (2) or (3) above directly or indirectly holds a Material
Interest or serves as a director, officer, employee, partner, member, executor,
or trustee (or in any other similar capacity).
"Company Reports" has the meaning assigned in Section 5.03(j).
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"Company Requisite Vote" has the meaning assigned in Section 5.03(e).
"Company SEC Documents" has the meaning assigned in Section 5.03(g).
"Company Stock" means, collectively, the Company Common Stock and the
Company Preferred Stock.
"Company Stock Award" has the meaning assigned in Section 3.05.
"Company Stock Option" means each option to purchase shares of Company
Common Stock outstanding under the Company Stock Plans.
"Company Stock Plans" has the meaning assigned in Section 5.03(b).
"Compensation Plans" has the meaning assigned in Section 5.03(o).
"Confidentiality Agreement" means the Confidentiality Agreement between
the Company and Acquiror, dated January 26, 2004.
"Consideration" has the meaning assigned in Section 3.01(a).
"Constitutive Documents" means with respect to any juridical person,
such person's articles or certificate of incorporation and its bylaws, or
similar constitutive documents.
"Contract" means, with respect to any person, any agreement, indenture,
undertaking, debt instrument, contract, lease, understanding or other
commitment, whether oral or in writing, to which such person or any of its
Subsidiaries is a party or by which any of them is bound or to which any of
their properties is subject.
"Costs" has the meaning assigned in Section 6.10(a).
"CRA" means the Community Reinvestment Act of 1977.
"DGCL" has the meaning assigned in Recital F.
"Deferred Compensation Plan" means the Company's Deferred Compensation
Plan, amended and restated as of March 30, 1999.
"Disclosure Schedule" has the meaning assigned in Section 5.01.
"Dissenters' Shares" means shares of Company Common Stock the holders
of which are Dissenting Stockholders.
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"Dissenting Stockholder" means any record holder or beneficial owner of
shares of Company Common Stock who complies with all provisions of the DGCL
(including all provisions of Section 262 of the DGCL) concerning the right of
holders of Company Common Stock to dissent from the Merger and obtain fair value
for their shares.
"Effective Time" means the date and time at which the Merger becomes
effective.
"Environmental Laws" means any federal, state or local law, regulation,
order, decree, permit, authorization, common law or agency requirement relating
to: (1) the protection or restoration of the environment, health or safety (in
each case as relating to the environment) or natural resources; or (2) the
handling, use, presence, disposal, release or threatened release of or exposure
to any Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" has, with respect to any person, the meaning assigned
in Section 5.03(o).
"ERISA Plans" has the meaning assigned in Section 5.03(o).
"ESOP" means the Company's Employee Stock Ownership Plan amended
effective January 1, 2001.
"Exchange Act" means the Securities Exchange Act of 1934 and the rules
and regulations thereunder.
"FDIC" means the Federal Deposit Insurance Corporation.
"Fee Payment Event" has the meaning assigned in Section 8.03(ii).
"Fee Termination Event" has the meaning assigned in Section 8.03(b).
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Substance" means any substance in any concentration that is:
(1) listed, classified or regulated pursuant to any Environmental Law; (2) any
petroleum or coal product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, black mold,
radioactive materials or radon; or (3) any other substance that may be the
subject of regulatory action by any Governmental Authority or a source of
liability pursuant to any Environmental Law.
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"Indemnifiable Claim" has the meaning assigned in Section 6.10(a).
"Indemnified Party" has the meaning assigned in Section 6.10(a).
"Initial Termination Fee" has the meaning assigned in Section
8.03(a)(i).
"Insurance Amount" has the meaning assigned in Section 6.10(b).
"Insurance Policies" has the meaning assigned in Section 5.03(v).
"Intellectual Property Rights" shall mean all worldwide industrial and
intellectual property rights, including patents, patent applications, patent
rights, trademarks, trademark applications, trade names, service marks, service
xxxx applications, copyright, copyright applications, franchises, licenses,
inventories, know-how, trade secrets, customer lists, proprietary processes and
formulae, all source and object code, algorithms, architecture, structure,
display screens, layouts, inventions, development tools, software, databases and
all documentation and media constituting, describing or relating to the above,
including manuals, memoranda and records.
"IRS" means the United States Internal Revenue Service.
"Liens" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, Right or encumbrance of any nature whatsoever.
"Listed Termination" has the meaning assigned in Section 8.03(c).
"Loans" means loans, other extensions of credit (including in the form
of leases or guaranties), commitments to extend credit and other similar assets.
"Material Adverse Effect" means, with respect to the Acquiror or the
Company, any effect that: (1) is materially adverse to the financial position,
results of operations, stockholders' equity, prospects, operations or business
of the Acquiror and its Subsidiaries taken as a whole, or the Company and its
Subsidiaries taken as a whole, respectively, other than effects resulting from
(A) changes in generally accepted accounting principles generally applicable to
savings and loan holding companies or bank holding companies, respectively, in
the United States, (B) changes resulting primarily from changes in banking laws
or regulations (or interpretations thereof) of general applicability in the
United States, (C) changes in general economic conditions or conditions
generally affecting the banking industry, provided in the case of each of (A),
(B) and (C) that such changes do not have a materially more adverse effect on
such party than that experienced by similarly situated banks and savings and
loan companies, including changes in interest rates, (D) actions taken or not
taken by such party required pursuant to the terms of this Agreement or upon the
request of the other party(ies) to this Agreement, and (E) changes in the
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Company's stock price in and of themselves; or (2) would materially impair the
ability of either the Acquiror or the Company to perform its obligations under
this Agreement or otherwise materially threaten or materially impede the
consummation of the Merger, the Bank Merger or the other transactions
contemplated by this Agreement.
"Material Interest" has the meaning assigned in the definition of
Company Related Person.
"Merger" has the meaning assigned in Section 2.01(a).
"Multiemployer Plan" means, with respect to any person, a multiemployer
plan within the meaning of Section 3(37) of ERISA.
"NYSBD" means the New York State Banking Department.
"OCC" has the meaning assigned in Section 5.03(j).
"OTS" means the Office of Thrift Supervision.
"Paying Agent" has the meaning assigned in Section 3.03.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" has, with respect to any person, the meaning assigned in
Section 5.03(o).
"Permitted Termination Date" has the meaning assigned in Section
8.01(c).
"person" means any individual, bank, savings bank, corporation,
partnership, limited liability company, association, joint-stock company,
business trust or unincorporated organization.
"Previously Disclosed" means, with respect to the Company or the
Acquiror, information set forth in such party's Disclosure Schedule in a
paragraph or section identified therein as corresponding to the provision of
this Agreement in respect of which such information has been so set forth.
"Proxy Statement" has the meaning assigned in Section 6.03.
"Public Proposal" has the meaning assigned in Section 8.03(a)(i)(2).
"REBEP" means the Retirement Benefit Equalization Plan of the Company,
effective January 1, 2000.
"representatives" means, with respect to any person, such person's
directors, officers, employees, legal or investment or financial advisors or any
representatives of such legal or financial advisors.
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"Rights" means, with respect to any person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such person.
"Risk Management Contract" has the meaning assigned in Section 5.03(s).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933 and the rules and
regulations thereunder.
"Subsequent Termination Fee" has the meaning assigned in Section
8.03(a)(ii).
"Subsidiary" includes either a "subsidiary" as defined in Rule 1-02 of
Regulation S-X of the SEC or a "subsidiary" as defined in Sections 225.2(o) and
583.23 of Title Twelve of the Code of Federal Regulations.
"Superior Proposal" has the meaning assigned in Section 6.06.
"Surviving Corporation" has the meaning assigned in Section 2.01(a).
"Takeover Laws" has the meaning assigned in Section 5.03(e).
"Taxes" means all taxes, charges, fees, levies or other assessments,
however denominated, including all net income, gross income, gross receipts,
sales, use, ad valorem, goods and services, capital, transfer, franchise,
profits, license, withholding, payroll, employment, employer health, excise,
estimated, severance, stamp, occupation, property or other taxes, custom duties,
fees, or charges of any kind whatsoever (whether federal, state, local, or
foreign), together with any interest and any penalties or additions to tax with
respect thereto and with respect to any information reporting requirements
imposed by the Code or any similar provision of foreign, state or local law and
any interest in respect of such additions or penalties imposed by any taxing
authority whether arising before, on or after the Closing Date.
"Tax Returns" means all reports, certifications and returns (including
any attachments, required or otherwise) required to be filed on or before the
Closing Date with respect to the Taxes of the Company or any of its Subsidiaries
by the Code or any similar foreign, state or local law (including consolidated
federal income tax returns and any documentation required to be filed with any
taxing authority or to be retained by the Company or any of its Subsidiaries in
respect of information reporting requirements).
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"Tolling Event" has the meaning assigned in Section 8.03(d).
"Treasury Shares" means shares of Company Common Stock owned, directly
or indirectly, by the Company or any of its Subsidiaries other than shares held
(1) in a fiduciary capacity that are beneficially owned by third persons,
including shares held in trust accounts and managed accounts, (2) in respect of
a debt previously contracted or (3) in connection with obligations and future
obligations under the Deferred Compensation Plan and the ESOP.
"Voting Agreement" has the meaning assigned in Recital E.
1.02 Interpretation. When a reference is made in this Agreement to
Recitals, Sections, Exhibits or Schedules, such reference shall be to a Recital
in, Section of, or Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." References
herein to "transactions contemplated by this Agreement" include the Merger and
the Bank Merger as well as the other transactions contemplated hereby and shall
be deemed to include a reference to the transactions contemplated by the Voting
Agreements. No rule of construction against the draftsperson shall be applied in
connection with the interpretation or enforcement of this Agreement. Whenever
this Agreement shall require a party to take an action, such requirement shall
be deemed to constitute an undertaking by such party to take, to cause its
Subsidiaries to take, and to use its commercially reasonable efforts to cause
its other affiliates to take, appropriate action in connection therewith. No
provision of this Agreement is to be construed to require, directly or
indirectly, any person to take any action, or omit to take any action, which
action or omission would violate applicable law (whether statutory or common
law), rule or regulation. References to "knowledge" of a person means knowledge
after reasonable diligence in the circumstances. All references to "dollars" or
"$" mean the lawful currency of the United States. Any reference in this
Agreement to any law, rule or regulation shall be deemed to include a reference
to any amendments, revisions or successor provisions to such law, rule or
regulation.
ARTICLE II
THE MERGER
2.01 The Merger. At the Effective Time, on the terms and subject to the
conditions set forth in this Agreement, the following shall occur:
(a) Structure and Effects of the Merger. Acquiror Sub shall merge with
and into the Company, and the separate corporate existence of Acquiror Sub shall
thereupon cease (the "Merger"). The Company shall be the surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving
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Corporation") and shall continue to be governed by the laws of the
State of Delaware, and the separate corporate existence of the Company with all
its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger. The Merger shall have the effects specified in the
DGCL.
(b) Certificate of Incorporation. At the Effective Time, and without
any further action on the part of the Acquiror, Acquiror Sub or any holder of
any shares of capital stock of the Company as in effect at the Effective Time,
the certificate of incorporation of the Company shall be amended to read in its
entirety as the certificate of incorporation of Acquiror Sub as in effect
immediately prior to the Effective Time (the "Certificate of Incorporation"),
until duly amended in accordance with the terms thereof and the DGCL.
(c) Bylaws. The bylaws of the Surviving Corporation (the "Bylaws") will
be the bylaws of the Acquiror Sub as in effect immediately prior to the
Effective Time, until duly amended in accordance with the terms thereof and the
Certificate of Incorporation.
(d) Directors. The directors of the Surviving Corporation will be the
directors of Acquiror Sub immediately prior to the Effective Time, and such
directors, together with any additional directors as may thereafter be elected,
shall hold such office until such time as their successors shall be duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Certificate of Incorporation and the Bylaws.
(e) Officers. The officers of the Surviving Corporation will be the
officers of Acquiror Sub immediately prior to the Effective Time, and such
officers, together with any additional officers as may thereafter be elected,
shall hold such office until such time as their successors shall be duly elected
or appointed and qualified or until their earlier death, resignation or removal
in accordance with the Certificate of Incorporation and the Bylaws.
2.02 Effective Time. The Merger shall become effective upon the filing,
in the office of the Secretary of State of the State of Delaware, of a
certificate of merger in accordance with Section 251 of the DGCL, or at such
later date and time as may be set forth in such certificate. Subject to the
terms of this Agreement, the parties shall cause the Merger to become effective
(1) on a day within five business days after the last of the conditions set
forth in Article VII (other than conditions relating solely to the delivery of
documents dated the Closing Date) shall have been satisfied or waived in
accordance with the terms of this Agreement (or, at the election of the
Acquiror, on the last business day of the month in which such day occurs), or
(2) on such date as the parties may agree in writing (the "Closing Date").
2.03 Closing. The closing of the Merger shall take place at 10:00 a.m.,
California time, on the Closing Date at the offices of Xxxxxx, Xxxx & Xxxxxxxx
LLP, Jamboree Center, 0 Xxxx Xxxxx, Xxxxxx, Xxxxxxxxxx, or at such other time
and place as the parties shall agree.
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2.04 The Bank Merger. After the Merger, Quaker City Bank (the "Bank"),
a federally chartered savings association and wholly owned Subsidiary of the
Company, shall be merged with and into Banco Popular North America, a New York
state-chartered bank and wholly owned Subsidiary of the Acquiror, pursuant to
the Bank Merger Act and other applicable federal and state laws and regulations
(the "Bank Merger").
2.05 Reservation of Right to Revise Structure. Notwithstanding anything
to the contrary contained in this Agreement or the Confidentiality Agreement,
before the Effective Time, the Acquiror may revise the structure of the Merger
or otherwise revise the method of effecting the acquisition of the Company by
the Acquiror, including by providing for (a) the Company to be merged with and
into Acquiror Sub (with Acquiror Sub surviving) or a directly or indirectly
wholly owned subsidiary of the Acquiror other than Acquiror Sub or (b) a
directly or indirectly wholly owned subsidiary of the Acquiror other than
Acquiror Sub to be merged with and into the Company; provided, however, that (1)
such revision does not reduce the value or nature of the Consideration or
payment of any other amounts contemplated by this Agreement and (2) such revised
structure or method is reasonably capable of consummation without significant
delay (and in no event in excess of a thirty (30) day delay) in relation to the
structure contemplated herein. In the event the Acquiror makes such an election,
the Company agrees to execute an appropriate amendment to this Agreement in
order to reflect such election.
ARTICLE III
CONSIDERATION
3.01 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Company
Common Stock:
(a) Conversion of Company Common Stock. Each share of Company Common
Stock outstanding immediately prior to the Effective Time (other than Treasury
Shares and Dissenters' Shares) shall be converted into the right to receive
$55.00 in cash consideration (the "Consideration"), without interest thereon. At
the Effective Time, the shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and cease to exist, and from
and after the Effective Time, certificates representing Company Common Stock
immediately prior to the Effective Time shall be deemed for all purposes to
represent the right to receive the Consideration pursuant to this Section
3.01(a).
(b) Acquiror Sub Common Stock. Each share of Acquiror Sub common stock
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock, par value $0.01 per share, of the
Surviving Corporation.
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(c) Treasury and Dissenters' Shares. Each share of Company Common Stock
held as Treasury Shares (which, for the avoidance of doubt, does not include
shares of Company Common Stock owned directly or indirectly by the Company in
connection with obligations and future obligations under the Deferred
Compensation Plan and the ESOP) or Dissenters' Shares immediately prior to the
Effective Time shall be canceled and retired at the Effective Time and, except
as set forth in Section 3.04 with respect to Dissenters' Shares, no
consideration shall be issued in exchange therefor.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Company Common Stock (other than Dissenters' Shares, if applicable)
shall cease to be, and shall have no rights as, stockholders of the Company,
other than to receive Consideration provided under this Article III. After the
Effective Time, there shall be no transfers on the stock transfer books of the
Surviving Corporation of shares of Company Common Stock (other than Dissenters'
Shares, if applicable).
3.03 Payment for Shares. At or prior to the Effective Time, the
Acquiror shall make available or cause to be made available to such bank as it
shall appoint (which bank shall be reasonably acceptable to the Company), as
paying agent (the "Paying Agent"), amounts sufficient in the aggregate to
provide all funds necessary for the Paying Agent to make payments of
Consideration to holders of all shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. Reasonably promptly after
the Effective Time, the Surviving Corporation shall cause the Paying Agent to
mail to each person who was, at the Effective Time, a holder of record of
outstanding shares of Company Common Stock a form of letter of transmittal and
instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented any of such shares in
exchange for payment therefor. Upon surrender to the Paying Agent of such
certificates, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, the Surviving Corporation
shall promptly cause the Paying Agent to pay to each person entitled thereto a
check in the amount of the Consideration to which such person is entitled, after
giving effect to any required Tax withholdings. No interest will be paid or will
accrue on any amount payable upon the surrender of any such certificate. If
payment is to be made to a person other than the registered holder of the
certificate surrendered, it shall be a condition of such payment that the
certificate so surrendered be properly endorsed or otherwise in proper form for
transfer and that the person requesting such payment pay any transfer or other
Taxes required by reason of the payment to a person other than the registered
holder of the certificate surrendered or establish to the satisfaction of the
Surviving Corporation or the Paying Agent that such Tax has been paid or is not
applicable. One hundred and eighty (180) days following the Effective Time, the
Surviving Corporation shall be entitled to cause the Paying Agent to deliver to
it any funds (including any interest or other amounts received with respect
thereto) made available to the Paying Agent that have not been disbursed to
holders of certificates formerly representing shares of Company Common Stock
outstanding on the Effective Time, and thereafter such holders shall be entitled
to look to the Surviving
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Corporation only as general creditors thereof with respect to the cash payable
upon due surrender of their certificates. Notwithstanding the foregoing, neither
the Paying Agent nor any party hereto shall be liable to any holder of
certificates formerly representing shares of Company Common Stock for any amount
paid to a public official pursuant to any applicable abandoned property, escheat
or similar laws.
3.04 Dissenting Stockholders. (a) Notwithstanding any provision of this
Agreement to the contrary, Dissenters' Shares shall not be converted into the
right to receive the Consideration but shall become the right to receive such
consideration as may be determined to be due to such Dissenting Stockholder
pursuant to the DGCL; provided, however, that each share of Company Common Stock
outstanding immediately prior to the Effective Time and held by a Dissenting
Stockholder who, after the Effective Time, loses his or her right of appraisal,
pursuant to the DGCL, shall be deemed to be converted as of the Effective Time
into the right to receive the Consideration, without any interest thereon.
(b) The Company shall give the Acquiror (1) prompt notice of any
demands for appraisal pursuant to the applicable provisions of the DGCL received
by the Company, withdrawals of such demands, and any other related instruments
served pursuant to the DGCL and received by the Company and (2) the opportunity
to direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. The Company shall not, except with the prior written consent of
the Acquiror, make any payment with respect to any such demands for appraisal or
offer to settle or settle any such demands.
3.05 Company Stock Options. At the Effective Time, each unexercised
Company Stock Option, stock appreciation right, phantom stock, stock grant,
stock award or other similar equity-based award ("Company Stock Award") then
outstanding, whether vested or unvested, without any action on the part of the
holder, shall be converted into the right to receive payment of an amount in
cash equal to the product of (1) the excess of the Consideration over the
applicable exercise price per share, if any, of such Company Stock Award and (2)
the applicable number of shares of Company Common Stock subject to such Company
Stock Award as of immediately prior to the Effective Time; provided that the
Company shall be entitled to withhold from such cash payment any amounts
required to be withheld under applicable law. As a condition to payment, each
holder shall deliver to the Acquiror an acknowledgement and waiver (in form and
substance reasonably to be mutually agreed by the Acquiror and the Company prior
to the Effective Time) that (i) confirms the cash amount to which the holder is
entitled under such holder's Company Stock Awards and (ii) releases the Company,
the Acquiror and their respective officers and directors from any and all claims
relating to the Company Stock Awards upon payment of the cash amount due. Each
Company Stock Award will be cancelled and shall cease to exist automatically as
of the Effective Time. Prior to the Effective Time, the Company shall take all
necessary actions required to effect the foregoing, including obtaining
resolutions of the Company Board, of the board of directors of the Bank or of a
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committee established under a Company Stock Plan, if applicable, to effect the
foregoing.
ARTICLE IV
ACTIONS PENDING THE MERGER
4.01 Forbearances of the Company. From the date hereof until the
Effective Time, the Company agrees, except as expressly provided in this
Agreement or in each case as may be required by applicable law, without the
prior written consent of an officer of the Acquiror, the Company will not, and
will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of the Company and its
Subsidiaries other than in the ordinary and usual course consistent with past
practice or fail to use commercially reasonable efforts to preserve intact their
business organizations and assets and maintain their rights, franchises and
authorizations and their existing relations with customers, suppliers, employees
and business associates; take any action that would reasonably be expected to
have a Material Adverse Effect upon the Company.
(b) Operations. Enter into any material new line of business or change
its material lending, investment, underwriting, risk and asset/liability
management and other material banking and operating policies, except as required
by applicable law, regulation or policies imposed by any Governmental Authority.
(c) Capital Stock. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (1) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Company Stock or any Rights, (2) permit any additional shares of Company Stock
to become subject to new grants of employee or director stock options, or
stock-based employee rights or arrangements, (3) repurchase, redeem or otherwise
acquire, directly or indirectly, any shares of Company Stock or any other
capital security of the Company, (4) effect any recapitalization,
reclassification, stock split, reverse stock split, or similar change in
capitalization, or (5) enter into, or take any action to cause any holders of
Company Stock to enter into, any agreement, understanding or commitment relating
to the right of holders of Company Stock to vote any shares of Company Stock, or
cooperate in any formation of any voting trust or similar arrangement relating
to such shares.
(d) Subsidiaries. Issue, sell or otherwise permit to become
outstanding, transfer, mortgage, encumber or otherwise dispose of or permit the
creation of any Lien in respect of, or amend or modify the terms of, any equity
interests held in a Subsidiary of the Company.
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(e) Dividends, Etc. Make, declare, pay or set aside for payment any
dividend, other than regular quarterly dividends in the ordinary course of
business on outstanding shares of Company Common Stock through the Effective
Time, in each instance in an amount not to exceed $0.20 per share, or dividends
from wholly owned Subsidiaries to the Company or to another wholly owned
Subsidiary of the Company, on or in respect of, or declare or make any
distribution on any shares of its capital stock or split, combine, redeem,
reclassify, purchase or otherwise acquire, any shares of its capital stock.
(f) Compensation; Employment Contracts; Etc. Enter into, amend, modify,
renew or terminate any employment, consulting, severance, change in control or
similar Contracts with any directors, officers, employees of, or independent
contractors with respect to, the Company or its Subsidiaries, or grant any
salary, wage or other increase or increase any employee benefit (including
incentive or bonus payments), except (1) for changes that are required by
applicable law, (2) to satisfy Previously Disclosed Contracts existing on the
date hereof, (3) for merit-based salary increases for non-executive employees in
the ordinary course of business and consistent with past practice or other
annual salary increases in the ordinary course of business and consistent with
past practice, or (4) for employment arrangements for newly hired non-executive
officer and non-management level employees in the ordinary and usual course of
business consistent with past practice, provided that any such Contract shall
not include any provision providing for payments to, or the conferring of other
benefits on, the person arising from a change of control of the Company.
(g) Benefit Plans. Other than the Previously Disclosed amendments to
the ESOP, the Deferred Compensation Plan and the REBEP, enter into, establish,
adopt, amend, modify or terminate any bonus, vacation, deferred compensation,
commission-based, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock based, incentive, stock bonus, stock purchase, restricted
stock, stock appreciation, stock option, medical, dental, disability, health or
life plan, or any other employee benefit and fringe benefit plan, Contract,
program or arrangement maintained or contributed to by the Company or any of its
Subsidiaries for the benefit of current or former officers, employees,
independent contractors or directors or any beneficiary or dependent of any of
the foregoing, including taking any action that accelerates the vesting or
exercisability of or the payment or distribution with respect to, stock options,
restricted stock or other compensation or benefits payable thereunder, except,
in each such case, (1) as may be required by applicable law, (2) to satisfy
Previously Disclosed Contracts existing on the date hereof or (3) to make, by or
before July 31, 2004, incentive compensation payments to officers and employees
consistent with past practice and as accrued to such date in an amount in the
aggregate not to exceed $1,250,000.
(h) Dispositions. Sell, transfer, mortgage, lease, encumber or
otherwise dispose of or permit the creation of any Lien (except for a Lien for
Taxes not yet due and payable) in respect of, or discontinue any material
portion of, its assets, deposits, business or properties, except (1) pursuant to
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Previously Disclosed Contracts existing on the date hereof, or (2) for sales of
Loans, debt securities or similar investments in the ordinary and usual course
of business consistent with past practice.
(i) Acquisitions. Other than in the ordinary and usual course of
business consistent with past practice, acquire any assets, business, properties
or deposits of another person, except (1) pursuant to Previously Disclosed
Contracts existing on the date hereof, or (2) by way of foreclosures in
satisfaction of debts previously contracted in good faith.
(j) Constitutive Documents. Amend (or suffer to be amended) the
Constitutive Documents of the Company or any of its Subsidiaries.
(k) Accounting Methods. Implement or adopt any change in the accounting
principles, practices or methods used by the Company and its Subsidiaries, other
than as may be required by generally accepted accounting principles.
(l) Contracts. Except in the ordinary course of business consistent
with past practice, (1) enter into, amend, renew or terminate any material
Contract or any other Contract that provides for either (A) aggregate payments
of $250,000 or more per annum or (B) a term exceeding one year or (2) amend or
modify in any material respect any of its existing material Contracts, it being
understood that this clause (l) shall not govern the entering into, amendment,
renewal or termination of any Loan.
(m) Claims. Settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually and in the aggregate for all such settlements, not more than
$100,000 and that would not reasonably be expected to establish an adverse
precedent or basis for subsequent settlements or require material changes in
business practices.
(n) Risk Management. (1) Implement or adopt any material change in its
credit risk and interest rate risk management and hedging policies, procedures
or practices; (2) fail to follow its existing policies or practices with respect
to managing its exposure to credit and interest rate risk; or (3) fail to use
commercially reasonable means, consistent with past practice, to avoid any
material increase in its aggregate exposure to interest rate risk.
(o) Indebtedness. Other than in the ordinary course of business
(including by way of creation of deposit liabilities, entry into repurchase
agreements, purchases or sales of federal funds, Federal Home Loan Bank
advances, and sales of certificates of deposit) consistent with past practice,
(1) incur any indebtedness for borrowed money, (2) assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other person or (3) cancel, release, assign or modify any material amount of
indebtedness of any other person.
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(p) Loans. (1) Make any Loan other than in the ordinary course of
business consistent with lending policies and practices as in effect on the date
hereof; or (2) make any commercial real estate Loan in excess of $7,500,000, or
any other Loan in excess of $7,500,000; provided that the Company or any of its
Subsidiaries may make any such Loan in the event (A) the Company or any of its
Subsidiaries has delivered to the Acquiror or its designated representative a
notice of its intention to make such Loan and such additional information as the
Acquiror or its designated representative may reasonably require and (B) the
Acquiror or its designated representative shall not have reasonably objected to
such Loan by giving notice of such objection within five business days following
the actual receipt by the Acquiror of the applicable notice of intention.
(q) Adverse Actions. (1) Subject to Section 6.06, take any action that
is intended or would reasonably be expected to result in (A) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(B) any of the conditions to the Merger set forth in Article VII not being
satisfied or (C) a material breach of any provision of this Agreement; or (2)
engage in any new line of business or make any acquisition that would not be
permissible for a United States bank holding company (as defined in the Bank
Holding Company Act of 1956) or would subject the Acquiror, the Company or any
Subsidiary of either to material regulation by a Governmental Authority that
does not presently regulate such company or to regulation by a Governmental
Authority that is materially different from current regulation.
(r) Taxes. Commence or settle any litigation, audit, examination, or
proceeding with respect to any liability for Taxes, enter into any Tax closing
agreement or request any private letter ruling or similar ruling, make or change
any material express or deemed Tax election (including with respect to any Tax
accounting period), file any amended Tax Return, take any action which is
reasonably likely to have a material adverse effect on any Tax position of the
Company or any of its Subsidiaries (or after the Merger, which is reasonably
likely to have a material adverse effect on any Tax position of the Acquiror),
change any of its methods of reporting income or deductions for Tax purposes or
take any other action with respect to Taxes that is outside the ordinary and
usual course of business or inconsistent with past practice.
(s) Company Related Person Contracts. Except as Previously Disclosed,
enter into, terminate, amend, or grant any consent or waiver under, or fail to
enforce any Contract with any Company Related Persons or amend or modify in any
material respect any of its existing Contracts with any Company Related Person;
provided that this clause (s) shall not apply to any Loan made by the Bank to
any non-executive officer or non-management employee of the Company or its
Subsidiaries in the ordinary course of business consistent with past practice.
(t) Capital Expenditures. Except in the ordinary course of business
consistent with past practice, make any capital expenditures in excess
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of $250,000 in any one case or $500,000 in the aggregate or enter into any
agreement contemplating capital expenditures in excess of $250,000 for any
twelve (12) month period.
(u) Commitments. Agree or commit to do, or enter into any Contract
regarding, anything that would be precluded by clauses (a) through (t) above
without first obtaining the Acquiror's consent, which consent shall not be
unreasonably withheld.
4.02 Forbearances of the Acquiror. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement, without the
prior written consent of the Company, the Acquiror will not, and will cause each
of its Subsidiaries not to, take any action that is intended or is reasonably
likely to result in (a) any of its representations and warranties set forth in
this Agreement being or becoming untrue in any material respect at any time at
or prior to the Effective Time, (b) any of the conditions to the Merger set
forth in Article VII not being satisfied on or before the date specified in
Section 8.01(c) or (c) a material breach of any provision of this Agreement;
except, in each case, as may be required by applicable law.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Disclosure Schedules. Prior to the date hereof, the Company has
delivered to the Acquiror and the Acquiror has delivered to the Company a
schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items the disclosure of which is necessary or appropriate either (a) in
response to an express disclosure requirement contained in a provision hereof or
(b) as an exception to one or more representations or warranties contained in
Section 5.03 (other than 5.03(r)(12) and (17)) or 5.04, respectively, or to one
or more of its covenants contained in Article IV; provided that the inclusion of
an item in a Disclosure Schedule as an exception to a representation or warranty
shall not be deemed an admission by the disclosing party that such item (or any
undisclosed item or information of comparable or greater significance)
represents a material exception or fact, event or circumstance with respect to
the Company or the Acquiror, respectively.
5.02 Standard. No representation or warranty of the Company or the
Acquiror contained in Section 5.03 or 5.04 shall be considered untrue or
incorrect, and no party hereto shall be considered to have breached a
representation or warranty, as a consequence of the existence of any fact, event
or circumstance unless such fact, event or circumstance, (a) is not Previously
Disclosed and (b) individually or taken together with all other facts, events or
circumstances that have not been Previously Disclosed with respect to any one or
more representations or warranties contained in Section 5.03 (other than Section
5.03(b), 5.03(h)) or 5.04 (in each case, read for this purpose without regard to
any individual reference to "materiality" or "Material Adverse Effect"),
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has had or is reasonably likely to have a Material Adverse Effect with respect
to the Company or the Acquiror, respectively.
5.03 Representations and Warranties of the Company. Except as
Previously Disclosed, the Company represents and warrants to the Acquiror and
Acquiror Sub as set forth in its Disclosure Schedule and as follows:
(a) Organization, Standing and Authority. The Company is duly
organized, validly existing and in good standing as a corporation under the laws
of Delaware, and is duly qualified to do business and is in good standing in all
the jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified.
(b) Company Stock. As of the date hereof, the authorized capital stock
of the Company consists solely of 20,000,000 shares of Company Common Stock, of
which not more than 6,281,783 shares were outstanding as of March 1, 2004, and
2,000,000 shares of Company Preferred Stock, no shares of which are outstanding.
No shares of Company Common Stock have been issued since March 1, 2004 other
than pursuant to the exercise of Company Stock Options. The outstanding shares
of Company Stock have been duly authorized and are validly issued, fully paid
and nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights). There are no shares of Company Stock
reserved for issuance other than pursuant to the Company Stock Plans, the
Company does not have any Rights issued or outstanding with respect to Company
Stock or any Company Stock Awards outstanding other than Company Stock Options,
and the Company does not have any commitment to authorize, issue or sell any
Company Stock or Rights, except pursuant to this Agreement. The Company has
Previously Disclosed a list of each Compensation Plan under which any shares of
capital stock of the Company or any Rights with respect thereto have been or may
be awarded or issued (the "Company Stock Plans"). As of March 1, 2004, the
Company had outstanding Company Stock Options representing the right to acquire
no more than 655,002 shares of Company Common Stock of which 655,002 Company
Stock Options have a per share exercise price less than the Consideration and an
aggregate of 203,338 shares of Company Common Stock authorized for future
issuance under the Stock Option Plans; no Company Stock Options have been
granted since such date. Except as described in the immediately preceding
sentence, the Company has no Company Common Stock authorized for issuance
pursuant to any Company Stock Plans or otherwise. The Company has Previously
Disclosed the weighted average exercise price for the Company Stock Options
under each of its Company Stock Plans. The Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or which are convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company on any matter.
(c) Subsidiaries. (1)(A) The Company has Previously Disclosed a list of
all its Subsidiaries together with the jurisdiction of organization of each such
Subsidiary, (B) the Company owns, directly or indirectly, all the
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outstanding equity securities of each of its Subsidiaries, (C) no equity
securities of any of its Subsidiaries are or may become required to be issued
(other than to the Company or its Subsidiaries), (D) there are no Contracts by
which any of such Subsidiaries is or may be bound to sell or otherwise transfer
any equity securities of any such Subsidiaries (other than to the Company or its
Subsidiaries), (E) there are no Contracts relating to its rights to vote or to
dispose of such securities (other than to the Company or its Subsidiaries), and
(F) all the equity securities of each such Subsidiary held by the Company or its
Subsidiaries are fully paid and nonassessable and are owned by the Company or
its Subsidiaries free and clear of any Liens.
(2) The Company has Previously Disclosed, as of the date hereof, a
list of all equity securities it or one of its Subsidiaries holds (other than in
a Subsidiary of the Company), including a description of any such issuer and the
percentage of the issuer's voting and/or non-voting securities and, as of the
Effective Time, no additional persons would need to be included on such a list.
The Company has Previously Disclosed a list, as of the date hereof, of all
partnerships, limited liability companies, joint ventures or similar entities,
in which it owns or controls an equity, partnership or membership interest,
directly or indirectly, and the nature and amount of each such interest and, as
of the Effective Time, no additional persons would need to be included on such a
list.
(3) Each of the Company's Subsidiaries has been duly organized and
is validly existing and in good standing under the laws of the jurisdiction of
its organization, and is duly qualified to do business and in good standing in
all the jurisdictions where its ownership or leasing of property or assets or
the conduct of its business requires it to be so qualified. The Bank is the
Company's only depository institution Subsidiary, and it (A) is an "insured
depository institution" as defined in the Federal Deposit Insurance Act and the
applicable regulations thereunder and (B) is "well capitalized" within the
meaning of the OTS's regulations codified at Title Twelve, Chapter V, Part 565
of the Code of Federal Regulations, and (C) has a rating of "Satisfactory" or
better under the CRA.
(d) Power. The Company and each of its Subsidiaries has the requisite
power and authority (corporate and other) to carry on its business as it is now
being conducted and to own all its properties and assets, and the Company has
the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby.
(e) Corporate Authority and Action. (1) The Company has taken all
corporate action necessary in order (A) to authorize the execution and delivery
of, and performance of its obligations under, this Agreement and (B) subject
only to receipt of the approval of the plan of merger contained in this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock (the "Company Requisite Vote") and the filing and notices as
identified in Section 5.03(f) hereof to consummate the Merger. This Agreement
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has been duly authorized, executed and delivered by the Company, and assuming
this Agreement constitutes a valid and binding obligation of Acquiror, this
Agreement constitutes a valid and legally binding obligation of the Company,
enforceable against it in accordance with its terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, conservatorship,
receivership, reorganization, moratorium, fraudulent transfer and similar laws
of general applicability relating to or affecting creditors' rights or by
general equity principles).
(2) The Company has taken all action required to be taken by it in
order to exempt each of this Agreement, the Voting Agreements and the
transactions contemplated hereby and thereby from, and each of this Agreement,
the Voting Agreements and the transactions contemplated hereby and thereby is
exempt from, (A) the requirements of any applicable "moratorium," "control
share," "fair price," or other antitakeover laws and regulation of any state
(collectively, "Takeover Laws"), including Section 203 of the DGCL, and (B)
Articles Fourth and Eighth of the Company's certificate of incorporation and any
other applicable provision of the Constitutive Documents of the Company or any
of its Subsidiaries.
(3) The Company Board has received the opinion of Xxxxx Banking
Consultants, Inc., dated the date of this Agreement, to the effect that, as of
the date of this Agreement, the Consideration to be received in the Merger by
the stockholders of the Company is fair to such stockholders from a financial
point of view.
(f) Approvals and Filings; No Defaults. (1) No consents or approvals
of, or filings (other than customary Tax filings) or registrations with, any
Governmental Authority or with any third party are required to be made or
obtained in connection with the execution, delivery or performance by the
Company of this Agreement, or to consummate the Merger, the Bank Merger or the
other transactions contemplated hereby and thereby, except for (A) the filing
with the SEC of the Proxy Statement in definitive form, (B) the filing of an
application with the OTS to decertify the Bank as may be required by the OTS,
(C) the filing by the Acquiror or one or more of its Subsidiaries and approval
of applications and notices, as applicable, with the Board of Governors of the
Federal Reserve System, the FDIC and the NYSBD, and expiration of any related
waiting periods, with respect to the Merger and the Bank Merger, (D) the filing
of a certificate of merger with the Secretary of State of the State of Delaware
pursuant to the DGCL, and (E) filings with or notification to the Nasdaq
National Market System. As of the date hereof, the Company is not aware of any
reason why the approvals of all Governmental Authorities necessary to permit
consummation of the transactions contemplated by this Agreement will not be
received on a timely basis without the imposition of a condition or requirement
described in Section 7.01(b).
(2) Subject to receipt of the regulatory approvals and expiration
of the waiting periods referred to in the preceding paragraph or in Section
5.04(d), and the making of required filings under federal and state
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securities laws, the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby do not and will not (A)
constitute a breach or violation of, or a default under, or give rise to any
Lien, any acceleration of remedies or any right of termination under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license, or Contract of the Company or of any of its Subsidiaries or to which
the Company or any of its Subsidiaries or any of their respective properties is
subject or bound, (B) constitute a breach or violation of, or a default under,
the Constitutive Documents of the Company or any of its Subsidiaries, or (C)
require any consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or Contract.
(g) SEC Documents; Financial Statements. The Company's Annual Reports
on Form 10-K for the fiscal years ended June 30, 2001, 2002 and 2003, and all
other reports, registration statements, definitive proxy statements or
information statements filed or to be filed by the Company or any of its
Subsidiaries subsequent to June 30, 2003 under the Securities Act, or under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed or to
be filed (collectively, the "Company SEC Documents") with the SEC, as of the
date filed, (A) complied or will comply in all material respects as to form with
the applicable requirements under the Securities Act or the Exchange Act, as the
case may be, and (B) did not (or if amended or superseded by a filing prior to
the date of this Agreement, then did not as of the date of such filing) and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
and each of the balance sheets contained in or incorporated by reference into
any such Company SEC Document (including the related notes and schedules
thereto) fairly presents, or will fairly present, the financial position of the
Company and its Subsidiaries as of its date, and each of the statements of
income and changes in stockholders' equity and cash flows or equivalent
statements in such Company SEC Documents (including any related notes and
schedules thereto) fairly presents, or will fairly present, the results of
operations, changes in stockholders' equity and changes in cash flows, as the
case may be, of the Company and its Subsidiaries for the periods to which they
relate, in each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as may be
noted therein, subject to normal year-end audit adjustments in the case of
unaudited statements.
(h) Absence of Undisclosed Liabilities and Changes. (1) Except as
disclosed in the Company SEC Documents filed prior to the date hereof, none of
the Company or its Subsidiaries has any obligation or liability (whether known,
unknown, mature, contingent or otherwise), that, individually or in the
aggregate, would reasonably be expected to constitute or have a Material Adverse
Effect on the Company and, since June 30, 2003, on a consolidated basis the
Company and its Subsidiaries have not incurred any liability other than in the
ordinary course of business consistent with past practice.
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(2) Since June 30, 2003, except for execution of this Agreement
and performance of its obligations hereunder, (A) the Company and its
Subsidiaries have conducted their respective businesses in the ordinary and
usual course consistent with past practice and (B) no event has occurred or
circumstance arisen that, individually or taken together with all other facts,
events and circumstances (described in any paragraph of Section 5.03 or
otherwise), has had or is reasonably likely to have a Material Adverse Effect
with respect to the Company.
(i) Litigation. Except as Previously Disclosed, no litigation, claim or
other proceeding before any arbitrator or Governmental Authority is pending
against the Company or any of its Subsidiaries and, to the Company's knowledge,
no such litigation, claim or other proceeding has been threatened. Except as
Previously Disclosed, there are no judgments, injunctions, writs, orders or
decrees binding upon the Company or its Subsidiaries that would (A) be binding
upon Acquiror following consummation of the transactions contemplated under this
Agreement and (B) adversely affect the conduct of the business of Company or its
Subsidiaries by Acquiror, or the business of Acquiror and its Subsidiaries, in
any material respect. Except as Previously Disclosed, no audit, investigation,
inspection or any other review or inquiry whatsoever by any Governmental
Authority concerning or involving the business of Company or its Subsidiaries
since January 1, 2000 has reported any material violation by Company or its
Subsidiaries of any material requirement of Applicable Law.
(j) Compliance with Laws. (1) The Company and each of its Subsidiaries
and, to the knowledge of the Company, their respective officers and employees:
(i) conducts its business in compliance with Applicable Law and, if
applicable, any certifications provided and to be provided pursuant to
Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002 were and will
be accurate as of their respective dates;
(ii) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Authorities required in order to permit them to own or
lease their properties and to conduct their businesses as presently
conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the
Company's knowledge, no suspension or cancellation of any of them is
threatened or would reasonably be expected to occur, and all such
filings, applications and registrations are current;
(iii) has received, since June 30, 2001, no notification or
communication from any Governmental Authority (i) asserting that the
Company or any of its Subsidiaries is not in compliance with any of
the statutes, regulations, or ordinances that such
-23-
Governmental Authority enforces or (ii) threatening to revoke any
license, franchise, permit, or governmental authorization (nor, to the
Company's knowledge, do grounds for any of the foregoing exist), or
(iii) restricting or disqualifying their activities;
(iv) is not aware of any pending or threatened investigation, review
or disciplinary proceedings by any Governmental Authority against the
Company, any of its Subsidiaries or any officer, director or employee
thereof;
(v) is not subject to any order or decree issued by, or a party to any
agreement or memorandum of understanding with, or a party to any
commitment letter or similar undertaking to, or subject to any order
or directive by, or a recipient of any supervisory letter from, and
has not adopted any board resolutions at the request of any
Governmental Authority and has not been advised by any Governmental
Authority that it is considering issuing or requesting any such
agreement or other action; and
(vi) since June 30, 2001, has timely filed all reports, registrations
and statements, together with any amendments required to be made with
respect thereto, that were required to be filed under any Applicable
Law with any applicable Governmental Authority (collectively, the
"Company Reports"). As of their respective dates, the Company Reports
complied with the applicable statutes, rules, regulations and orders
enforced or promulgated by the regulatory authority with which they
were filed.
(2) None of the Company or its Subsidiaries (x) has engaged in any
of the practices listed in Office of the Comptroller of the Currency (the "OCC")
Advisory Letter AL 2000-7 as "indications that an institution may be engaging in
abusive lending practices" or as practices that "may suggest the potential for
fair lending violations", (y) has engaged in any "predatory" or "abusive"
lending practices as described in the Expanded Guidance for Subprime Lending
Programs, issued by the OCC, the Board of Governors of the Federal Reserve
System, the FDIC and the OTS on January 31, 2001, or (z) has originated, owned
or serviced or currently owns or services any Loan subject to the requirements
of Section 226.32 of Title Twelve of the Code of Federal Regulations.
-24-
(k) Material Contracts and Loans; Defaults. The Company has Previously
Disclosed a complete and accurate list of all material Contracts (and in the
case of material Contracts constituting Loans by the Company or any of its
Subsidiaries, the total amounts available for borrowing and outstanding under
such Loans as of the date hereof) to which the Company or any of its
Subsidiaries is a party or to which the Company or any of its Subsidiaries or
their respective properties is subject or bound, including the following:
(1) any Contract not constituting a Loan that (A) is not
terminable at will both without cost or other liability to the Company or any of
its Subsidiaries and upon notice of thirty (30) days or less and (B) provides
for fees or other payments in excess of $150,000 per annum or in excess of
$300,000 for the remaining term of the Contract;
(2) any Contract that contains an "exclusivity" clause (that is,
obligates the Company or any of its Subsidiaries to conduct business with
another party on an exclusive basis or restricts the ability of the Company or
any of its Subsidiaries to conduct business with any person);
(3) any Loan by the Company or any of the Subsidiaries pursuant to
which total amounts committed or outstanding under such Loan exceed $7,500,000;
(4) any Contract with a term beyond the Effective Time under which
the Company or any of its Subsidiaries created, incurred, assumed, or guaranteed
(or may create, incur, assume, or guarantee) indebtedness for borrowed money
(including capitalized lease obligations) in excess of $250,000, other than
Federal Home Loan Bank advances, dealer repurchase repossessions and broker
certificates of deposit in each case in the ordinary course of business
consistent with past practice;
(5) any Contract between the Company or any of its Subsidiaries
and a Company Related Person, other than any Loan made by the Company Bank to
non-executive officer or non-management employee of the Company or its
Subsidiaries in the ordinary course of business consistent with past practice;
(6) any Contract with respect to the employment of, or payment to,
any present or former directors, officers, employees or consultants involving
payment of more than $100,000 per annum;
(7) any Contract involving the purchase or sale of assets with a
book value greater than $100,000 entered into since June 30, 2001, other than
Contracts entered into in the ordinary course of business consistent with past
practice with respect to the purchase or sale of Loans; and
(8) any Contract involving a commitment for future capital
expenditures in excess of $250,000 in a twelve (12) month period or $500,000 in
the aggregate.
-25-
Neither the Company nor any of its Subsidiaries nor, to the Company's knowledge,
any other party thereto is in default under any such Contract 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. The Contracts referred to in Section 5.03(k)(5)
above are on arm's-length terms or terms more favorable to the Company and its
Subsidiaries.
(l) Activities. Since June 30, 1999, neither the Company nor any of its
Subsidiaries has engaged in real estate development activities or mezzanine
lending activities and neither the Company nor any of its Subsidiaries has
beneficially owned any equity securities of any person engaged in either of such
activities.
(m) Non-Competition/Non-Solicitation. Neither the Company nor any of
its Subsidiaries is a party to or bound by any non-competition or
non-solicitation agreement or any other agreement or obligation (1) that limits,
purports to limit, or would limit in any respect the manner in which, or the
localities in which, any business of the Company or its affiliates is or could
be conducted or the types of business that the Company or its affiliates
conducts or may conduct, (2) that could reasonably be understood to limit or
purport to limit in any respect the manner in which, or the localities in which,
any business of the Acquiror or its affiliates is or could be conducted or the
types of business that the Acquiror or its affiliates conducts or may conduct,
or (3) that limits, purports to limit or would limit in any way the ability of
the Company and its Subsidiaries to solicit prospective employees or would so
limit or purport to limit the ability of the Acquiror or its affiliates to do
so.
(n) Properties. Except as disclosed in the financial statements filed
in the Company SEC Documents on or before the date hereof, the Company and its
Subsidiaries have good and marketable title, free and clear of all Liens (other
than Liens for Taxes not yet due and payable, mechanics Liens, materialmen
Liens, or other inchoate Liens) to the properties and assets, tangible or
intangible, reflected in such financial statements (including the notes thereto)
as being owned by the Company and its Subsidiaries as of the dates thereof. All
buildings and all fixtures, equipment, and other property and assets that are
material to its business and are held under leases or subleases by any of the
Company and its Subsidiaries are held under valid leases or subleases
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, conservatorship,
receivership, reorganization, moratorium, fraudulent transfer and similar laws
of general applicability relating to or affecting creditors' rights generally or
by general equity principles) and, with respect to real property held under
lease by the Company or any of its Subsidiaries, neither the Company nor such
Subsidiary, as the case may be, nor, to the knowledge of the Company, the lessor
is in default of any material provision of the related lease agreement. The
Company has Previously Disclosed any real property owned or held under lease by
the Company or any of its Subsidiaries.
-26-
(o) Employee Benefit Plans. (1) The Company has Previously Disclosed a
complete list of all "employee benefit plans" within the meaning of Section 3(3)
of ERISA and including, but not limited to, all bonus, vacation, deferred
compensation, commission-based, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock based, incentive, stock bonus, stock
purchase, restricted stock, stock appreciation and stock option plans, all
employment or severance contracts, all medical, dental, disability, severance,
health and life plans, all other employee benefit and fringe benefit plans,
Contracts, policies, programs or arrangements and any "change of control" or
similar provisions in any plan, contract, program or arrangement maintained or
contributed to by the Company or any of its Subsidiaries for the benefit of
current or former officers, employees or directors or the beneficiaries or
dependents of any of the foregoing (collectively, the "Compensation Plans"), and
each Compensation Plan that has received a favorable determination or opinion
letter from the Internal Revenue Service National Office, including any master
or prototype plan, has been separately identified. True and complete copies of
all Previously Disclosed Compensation Plans, including, but not limited to, any
trust instruments, insurance contracts and, with respect to any employee stock
ownership plan, loan agreements forming a part of any Compensation Plans, and
all amendments thereto have been provided to the Acquiror.
(2) Each of the Compensation Plans has been administered and
operated in all material respects in accordance with the terms thereof and is in
compliance with ERISA, the Code, the Securities Act and other applicable law.
For each of the Compensation Plans that is subject to ERISA (collectively, the
"ERISA Plans") and that is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA ("Pension Plan") and that is intended to be qualified
under Section 401(a) of the Code, the Company has received a favorable
determination or opinion letter from the IRS (or, in the case of the Cash
Balance Plan, filed an application to receive such a determination letter)
covering all tax law changes prior to the Economic Growth and Tax Relief
Reconciliation Act of 2001 or has applied to the IRS for such favorable
determination letter within the applicable remedial amendment period under
Section 401(b) of the Code, and the Company is not aware of any circumstances
likely to result in the loss of the qualification of such Compensation Plan
under Section 401(a) of the Code. Any voluntary employees' beneficiary
association within the meaning of Section 501(c)(9) of the Code that provides
benefits under a Compensation Plan has (i) received an opinion letter from the
IRS recognizing its exempt status under Section 501(c)(9) of the Code, and the
Company is not aware of circumstances likely to result in the loss of such
exempt status under Section 501(c)(9) of the Code. Neither the Company, nor any
of its Subsidiaries has engaged in any transaction with respect to any
Compensation Plan that, assuming the taxable period of such transaction expired
as of the date hereof, could subject the Company or any of its Subsidiaries to a
tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of
ERISA in an amount that would be material. There is no pending or, to the
Company's knowledge, threatened litigation or governmental audit, examination or
investigation relating to the Compensation Plans. Neither the Company nor any of
its
-27-
Subsidiaries has incurred or reasonably expects to incur a material tax or
penalty imposed by Section 4980F of the Code or Section 502 of ERISA.
(3) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by the Company or any of its Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan", within
the meaning of Section 4001 (a)(15) of ERISA, currently or formerly maintained
or contributed to by any of them, or the single-employer plan of any entity
which is considered one employer with the Company under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). The Company and its Subsidiaries
have not incurred and do not expect to incur any withdrawal liability with
respect to a Multiemployer Plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No notice
of a "reportable event," within the meaning of Section 4043 of ERISA for which
the 30 day reporting requirement has not been waived or extended, other than
pursuant to PBGC Reg. Section 4043.66, has been required to be filed for any
Pension Plan or by any ERISA Affiliate within the immediately preceding 12-month
period or will be required to be filed in connection with the transaction
contemplated by this Agreement.
(4) All contributions, premiums and payments required to be made
under the terms of any of the Compensation Plans or applicable law have been
timely made and all obligations in respect of each Compensation Plan have been
properly accrued and reflected in the Company SEC Documents and the financial
statements contained therein. Neither any of the Pension Plans nor any
single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA and no ERISA Affiliate has an outstanding funding
waiver. It is not reasonably anticipated that required minimum contributions to
any Pension Plan under Section 412 of the Code will be materially increased by
application of Section 412(l) of the Code. Neither the Company nor any of its
Subsidiaries has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(5) Under each Pension Plan that is a single-employer plan, as of
the last day of the most recent plan year ended, the actuarially determined
present value of all "benefit liabilities," within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions
contained in such Pension Plan's most recent actuarial valuation), did not
exceed the then current value of the assets of such Pension Plan, and there has
been no adverse change in the financial condition of such Pension Plan (with
respect to either assets or benefits) since the last day of the most recent plan
year.
(6) Neither the Company nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Compensation Plan or
collective bargaining Contract, except as Previously Disclosed. The Company or
the Subsidiaries may amend or terminate any such plan at any time without
-28-
incurring any liability thereunder other than in respect of claims incurred
prior to such amendment or termination. There has been no communication to
employees, former employees or their spouses, beneficiaries or dependents by the
Company or any of its Subsidiaries that promised or guaranteed such employees
retiree health or life insurance or other retiree death benefits on a permanent
basis or promised or guaranteed that any such benefits could not be modified,
eliminated or terminated.
(7) There has been no amendment to, announcement by the Company or
any of its Subsidiaries relating to, or change in employee eligibility or
coverage under, any Compensation Plan that would materially increase the expense
of maintaining such plan above the level of the expense incurred therefor for
the most recent fiscal year (it being understood that this sentence does not
cover any increase in expenses related to any increase in the number of
employees). None of the execution of this Agreement, stockholder adoption of
this Agreement or the consummation of the transactions contemplated hereby will
(w) entitle any employees of the Company or any of its Subsidiaries to severance
pay or any increase in severance pay upon any termination of employment after
the date hereof, (x) accelerate the time of payment or vesting or result in any
payment or funding (through a grantor trust or otherwise) of compensation, stock
awards or other benefits under, increase the amount payable or result in any
other material obligation pursuant to, any of the Compensation Plans, (y) limit
or restrict the right of the Company or, after the consummation of the
transactions contemplated hereby, the Acquiror to merge, amend or terminate any
of the Compensation Plans, or (z) result in payments under any of the
Compensation Plans which would not be deductible under Section 162(m) or Section
280G of the Code.
(8) The Company has Previously Disclosed for all current officers,
employees and directors of the Company or any of its Subsidiaries (x) complete
lists stating the current base salary, fiscal 2003 earned incentive compensation
and estimated fiscal 2004 target incentive compensation (as accrued to date
consistent with past practice) of $1,250,000, and (y) any additional payments
triggered by this Agreement or the transaction contemplated hereby.
(p) Labor Matters. Each of the Company and its Subsidiaries is in
compliance with all applicable law respecting employment and employment
practices, terms and conditions of employment and wages and hours, including the
Immigration Reform and Control Act of 1986, any such laws respecting employment
discrimination, disability rights or benefits, equal opportunity, affirmative
action, workers' compensation, employee benefits, severance payments, labor
relations, employee leave issues, wage and hour standards, occupational safety
and health requirements and unemployment insurance and related matters. Neither
the Company nor any of its Subsidiaries is a party to or is bound by any
collective bargaining Contract or understanding with a labor union or labor
organization, nor is the Company or any of its Subsidiaries the subject of a
proceeding asserting that it or any such Subsidiary has committed an unfair
labor practice (within the meaning of the National Labor Relations
-29-
Act) or seeking to compel the Company or any such Subsidiary to bargain with any
labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving it or any of its Subsidiaries pending
or, to the Company's knowledge, threatened, nor is the Company aware of any
activity involving it or any of its Subsidiaries' employees seeking to certify a
collective bargaining unit or engaging in other organizational activity. The
consummation of the Merger, the Bank Merger and the other transactions
contemplated by this Agreement will not entitle any third party (including any
labor union or labor organization) to any payments under any Contract to which
the Company or any Subsidiary of the Company is a party.
(q) Environmental Matters. (1) The Company and each of its Subsidiaries
have complied at all times with all applicable Environmental Laws; (2) no
property (including soils, groundwater, buildings, tanks, piping and any other
structures) currently or formerly owned or operated by the Company or any of its
Subsidiaries or in which the Company or any of its Subsidiaries has a Lien, has
been contaminated with, or has had any release of, any Hazardous Substance; (3)
neither the Company nor any of its Subsidiaries could be deemed the owner or
operator under any Environmental Law of any property in connection with any
Loans or in which it has currently or formerly held a Lien or security interest;
(4) neither the Company nor any of its Subsidiaries is subject to liability for
any Hazardous Substance disposal or contamination on any other third-party
property; (5) neither the Company nor any of its Subsidiaries has received any
notice, demand letter, claim or request for information relating to any
violation of, or liability under, any Environmental Law; (6) neither the Company
nor any of its Subsidiaries is subject to any order, decree, injunction or other
agreement with any Governmental Authority or any indemnity or other agreement
with any third party relating to any Environmental Law; (7) there are no other
circumstances or conditions involving the Company or any of its Subsidiaries,
any currently or formerly owned or operated property, or any Lien held by the
Company or any of its Subsidiaries (including the presence of asbestos,
underground storage tanks, contamination, polychlorinated biphenyls, black mold
or gas station sites) that could be expected to result in any claims, liability
or investigations or result in any restrictions on the ownership, use, or
transfer of any property pursuant to any Environmental Law; and (8) the Company
has made available to the Acquiror copies of all environmental reports, studies,
sampling data, correspondence, filings and other environmental information in
its possession or reasonably available to it relating to the Company, any of its
Subsidiaries, any currently or formerly owned or operated property or any
property in which the Company or any of its Subsidiaries has held a Lien and
could be deemed an owner or operator of such property pursuant to any
Environmental Law.
(r) Tax Matters. (1) All Tax Returns that are required to be filed with
respect to the Company or any of its Subsidiaries have been or will be prepared
in good faith and be timely filed; (2) all Tax Returns filed by the Company and
its Subsidiaries are true, complete and accurate; (3) all Taxes that are due and
payable (without regard to whether such Taxes have been assessed) have been
timely paid; (4) except as Previously Disclosed, all Tax
-30-
Returns referred to in clause (1) have been examined by the IRS or the
appropriate state, local, or foreign taxing authority or the period for
assessment of the Taxes for which such return has been filed has expired; (5) no
audit or examination or refund litigation with respect to any such Tax Return is
pending or has been threatened; (6) all deficiencies asserted or assessments
made as a result of any examination of a Tax Return of the Company or any of its
Subsidiaries, have been paid in full or have been fully resolved; (7) the
Company and its Subsidiaries have complied with all information reporting
requirements imposed by the Code or any similar foreign, state or local law; (8)
no waivers of statute of limitations that are currently in effect have been
given by or requested with respect to any Taxes of the Company or its
Subsidiaries; (9) the Company and each of its Subsidiaries has in its respective
files all Tax Returns that it is required to retain in respect of information
reporting or return or record retention requirements imposed by the Code or any
similar foreign, state or local law; (10) neither the Company nor its
Subsidiaries (A) except as Previously Disclosed, has ever been a member of an
affiliated, combined, consolidated or unitary Tax group for purposes of filing
any Tax Return (other than, for purposes of filing consolidated U.S. Tax
Returns, a consolidated group of which the Company was the common parent) or (B)
has any liability for Taxes of any Person (other than the Company or its
Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar
provisions of state, local, or foreign law), as transferee or successor, by
contract or otherwise; (11) no closing agreements, private letter rulings,
technical advice memoranda or similar agreement or rulings have been entered
into or issued by any taxing authority with respect to the Company or any of its
Subsidiaries; (12) no tax is required to be withheld pursuant to Section 1445 of
the Code as a result of the Merger and any other transactions contemplated by
this Agreement; (13) none of the Company and its Subsidiaries are bound by any
tax indemnity, tax sharing or tax allocation agreement or arrangement (except
for tax-sharing agreements or arrangements among the Company and any of its
Subsidiaries that are Previously Disclosed and provided in full, with all
amendments, to the Acquiror); (14) all Taxes that the Company or any Subsidiary
is or was required by law to withhold or collect have been duly withheld or
collected and, to the extent required by applicable law, have been paid to the
proper Governmental Authority or other person using the proper method and
receipt for such payment has been received; (15) except as Previously Disclosed,
neither the Company nor any of its Subsidiaries will be required, as a result of
(A) a change in accounting method for a Tax period beginning on or before the
Closing Date, to include any adjustment under Section 481(c) of the Code (or any
similar provision of state, local or foreign law) in taxable income for any Tax
period beginning on or after the Closing Date, or (B) any "closing agreement" as
described in Section 7121 of the Code (or any similar provision of state, local
or foreign Tax law), to include any item of income in or exclude any item of
deduction from any Tax period beginning on or after the Closing Date; (16) there
are no Liens on any of the assets of the Company or any of its Subsidiaries that
arose in connection with any failure (or alleged failure) to pay any Tax and no
taxing authority is in the process of imposing any such Lien (other than Taxes
not yet due and payable); (17) as a result of any transaction
-31-
contemplated by this Agreement, except as Previously Disclosed, none of the
Company or any of its Subsidiaries or Acquiror will be obligated to make a
payment to an individual that would be a "parachute payment" to a "disqualified
individual" as those terms are defined in Section 280G of the Code without
regard to whether such payment is reasonable compensation for personal services
performed or to be performed in the future; (18) none of the Company or any of
its Subsidiaries has been a party to any distribution occurring during the last
three years in which the parties to such distribution treated the distribution
as one to which Section 355 of the Code (or any similar provision of state,
local or foreign law) applied; and (19) as of the date hereof, each of the
Company and its Subsidiaries has made available to Acquiror or its designee
true, correct, and complete copies of all income, franchise, capital, and
similar Tax Returns either the Company or its Subsidiaries for all Tax
accounting periods for which the relevant statute of limitations has not
expired.
(s) Risk Management; Provision for Loan Losses. (1) All swaps, caps,
floors, option agreements, futures and forward contracts and other similar risk
management arrangements, whether entered into for the Company's own account, or
for the account of one or more of the Company's Subsidiaries or their customers
(each a "Risk Management Contract"), were entered into (A) in accordance with
prudent business practices and all Applicable Law and regulatory policies and
(B) with counterparties believed to be financially responsible at the time; and
each of them constitutes the valid and legally binding obligation of the Company
or one of its Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
conservatorship, receivership, reorganization, moratorium, fraudulent transfer
and similar laws of general applicability relating to or affecting creditors'
rights or by general equity principles), and are in full force and effect. The
Company has Previously Disclosed all Risk Management Contracts that have been
entered into as of the date hereof. Neither the Company nor its Subsidiaries,
nor to the Company's knowledge any other party thereto, is in breach of any of
its obligations under any Risk Management Contract.
(2) The provision for loan losses reflected on the consolidated
balance sheets included in the Company SEC Documents filed subsequent to January
1, 2003 are, and at the Effective Time will be, in the reasonable judgment of
the Company's management, adequate as of their respective dates under the
requirements of generally accepted accounting principles and applicable
regulatory requirements and guidelines.
(t) Books and Records. The books and records of the Company and its
Subsidiaries have been properly and accurately maintained, and there are no
inaccuracies or discrepancies contained or reflected therein.
(u) Accounting Controls. Each of the Company and its Subsidiaries has
devised and maintained systems of internal accounting controls sufficient to
provide reasonable assurances, in the judgment of the Company Board, that: (1)
all transactions are executed in accordance with
-32-
management's general or specific authorization; (2) all transactions are
recorded as necessary to permit the preparation of financial statements in
conformity with generally accepted accounting principals consistently applied
with respect to any criteria applicable to such statements and to maintain
accountability for assets; (3) access to the assets of the Company and its
Subsidiaries is permitted only in accordance with management's general or
specific authorization; and (4) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(v) Insurance. The Company has made available to the Acquiror all of
the insurance policies, binders, or bonds maintained by or for the benefit of
the Company or its Subsidiaries ("Insurance Policies") or their representatives.
The Company and its Subsidiaries are insured with reputable insurers against
such risks and in such amounts as the management of the Company reasonably has
determined to be prudent in accordance with industry practices. All of the
Insurance Policies are in full force and effect, the Company and its
Subsidiaries are not in default thereunder, and all claims thereunder have been
filed in due and timely fashion.
(w) No Brokers; Advisors. No action has been taken by the Company or
its Subsidiaries (including their directors, officers or employees) that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the transactions
contemplated by this Agreement, except that the Company has employed Xxxxx
Banking Consultants, Inc. and Xxxxx Financial LLC in connection with this
transaction on Previously Disclosed terms. The Company has Previously Disclosed
all other advisors it has hired in connection with this Agreement and the
transactions contemplated hereby and the amount of anticipated payments to such
advisors.
(x) Intellectual Property. The Company and its Subsidiaries own or have
the right to use all material Intellectual Property Rights necessary or required
for the operation of their business as currently conducted (collectively,
"Company IP Rights"), and have the right to use, license, sublicense or assign
the same without material liability to, or any requirement of consent from, any
other person or party. The Company's use of the Company IP Rights does not
infringe any Intellectual Property Rights of any person; there is no pending or,
to the knowledge of the Company, threatened litigation, adversarial proceeding,
administrative action or other challenge or claim relating to any Company IP
Rights; to the knowledge of the Company, there is currently no infringement by
any person of any Company IP Rights; and the Company IP Rights owned, used or
possessed by the Company and its Subsidiaries are sufficient and adequate to
conduct the business of the Company and its Subsidiaries to the full extent as
such business is currently conducted.
(y) Disclosure. The information Previously Disclosed or otherwise
provided to the Acquiror in connection with this Agreement, when taken together
with the representations and warranties contained herein, does not
-33-
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements contained therein, in the light
of the circumstances in which they are being made, not misleading. The copies of
all documents furnished to the Acquiror hereunder are true and complete.
5.04 Representations and Warranties of the Acquiror. Except as
Previously Disclosed, the Acquiror represents and warrants to the Company, and
Acquiror Sub will represent to the Company, as set forth in its Disclosure
Schedule as follows:
(a) Organization, Standing and Authority. The Acquiror is duly
organized, validly existing and in good standing under the laws of Puerto Rico.
Following its formation, Acquiror Sub will be duly organized, validly existing
and in good standing under the laws of Delaware. The Acquiror is, and Acquiror
Sub will be, following its formation, duly qualified to do business and in good
standing in the jurisdictions where the ownership or leasing of property or
assets or the conduct of business requires such qualification by Acquiror or
Acquiror Sub, as applicable.
(b) Corporate Power. The Acquiror has, and Acquiror Sub will have, as
of the Closing Date, the requisite power and authority to carry on its business
as it is now being or, in the case of Acquiror Sub, will be, conducted and to
own all its properties and assets; the Acquiror has, and Acquiror Sub will have,
as of the date it executes a supplement to this Agreement as required by Section
6.16 hereof, the corporate power and authority to execute, deliver and perform
its obligations under this Agreement and, in the case of Acquiror Sub, to adopt
the plan of merger contained in this Agreement and, in accordance therewith, to
consummate the transactions contemplated hereby.
(c) Corporate Authority and Action. The Acquiror has, and Acquiror Sub
will have, as of the date it executes a supplement to this Agreement as required
by Section 6.16 hereof, taken all corporate action necessary in order to
authorize the execution and delivery of, and performance of its obligations
under, this Agreement and to consummate the Merger and the Bank Merger. This
Agreement has been duly authorized, executed and delivered by the Acquiror and,
assuming this Agreement constitutes a valid and legally binding obligation of
the Company, this Agreement constitutes a valid and legally binding obligation
of the Acquiror, enforceable against it in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
conservatorship, receivership, reorganization, moratorium, fraudulent transfer
and similar laws of general applicability relating to or affecting creditors'
rights or by general equity principles). Upon the execution of a supplement to
this Agreement by Acquiror Sub, this Agreement will be the valid and legally
binding obligation of Acquiror Sub, enforceable against it in accordance with
its terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, conservatorship, receivership, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles).
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(d) Regulatory Approvals and Filings; No Defaults. (1) No consents or
approvals of, or filings or registrations with, any Governmental Authority or
with any third party are required to be made or obtained by the Acquiror or any
of its Subsidiaries in connection with the execution, delivery or performance by
the Acquiror or Acquiror Sub of this Agreement or to consummate the Merger, the
Bank Merger or the other transactions contemplated hereby except for (A) the
filing and approval of applications and notices, as applicable, with the Board
of Governors of the Federal Reserve System, the FDIC and the NYSBD, and
expiration of any related waiting periods, with respect to the Merger and the
Bank Merger; (B) the filing of a certificate of merger with the Secretary of
State of the State of Delaware pursuant to the DGCL; and (C) filings with or
notification to the Nasdaq National Market System. As of the date hereof, the
Acquiror is not aware of any reason why, including, without limitation, any
pending or threatened (x) investigation, review or disciplinary proceeding by
any Governmental Authority against the Acquiror, any of its Subsidiaries or any
officer, director or employee thereof or (y) order, decree or directive by any
Governmental Authority, in each case of which the Acquiror is aware, the
approvals of all Governmental Authorities necessary to permit consummation of
the transactions contemplated hereby will not be received on a timely basis
without the imposition of a condition or requirement described in Section
7.01(b).
(2) Subject to receipt of the regulatory approvals and expiration
of the waiting periods referred to in the preceding paragraph or in Section
5.03(f), and the making of all required filings under federal and state
securities laws, the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby do not and will not (A)
constitute a breach or violation of, or a default under, or give rise to any
Lien, any acceleration of remedies or any right of termination under any law,
rule or regulation or any judgment, decree, order, governmental permit or
license or Contract of the Acquiror or of any of its Subsidiaries or to which
the Acquiror or any of its Subsidiaries or their respective properties is
subject or bound, (B) constitute a breach or violation of, or a default under,
the Constitutive Documents of the Acquiror or any of its Subsidiaries, or (C)
require any consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or Contract.
(e) Funds. As of the date hereof, the Acquiror has borrowing capacity
under existing credit arrangements and/or pursuant to existing effective
registration statements to raise proceeds from such borrowings in an amount
sufficient to pay the Consideration. At the Effective Time, the Acquiror will
have the funds necessary to consummate the Merger and pay the Consideration in
accordance with the terms of this Agreement.
(f) Interim Operations of Acquiror Sub. Acquiror Sub will be formed
solely for the purpose of engaging in the transactions contemplated hereby and,
as of the Closing Date, will have engaged in no business other than in
connection with the transactions contemplated by this Agreement. Acquiror Sub
will be a direct or indirect wholly owned subsidiary of the Acquiror.
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(g) No Brokers. No action has been taken by the Acquiror or Acquiror
Sub that would give rise to any valid claim against any party hereto for a
brokerage commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS
6.01 Commercially Reasonable Efforts. (a) Subject to the terms and
conditions of this Agreement, each of the Company, the Acquiror and Acquiror Sub
agrees to use its commercially reasonable efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable law, so as to
permit consummation of the Merger and the Bank Merger as promptly as practicable
and otherwise to enable consummation of the transactions contemplated hereby and
shall cooperate fully with the other party hereto to that end.
(b) Without limiting the generality of Section 6.01(a), the Company
agrees to use its commercially reasonable efforts to obtain the consent or
approval of all persons party to a Contract with the Company or any of its
Subsidiaries, to the extent such consent or approval is required in order to
consummate the Merger or the Bank Merger or for the Surviving Corporation to
receive the benefits of such Contract.
6.02 Stockholder Approval. The Company agrees to take, in accordance
with applicable law, applicable Nasdaq National Market System rules, the rules
of any other relevant exchange and the Company's Constitutive Documents, all
action necessary to convene an appropriate meeting of stockholders of the
Company as promptly as practicable after the date hereof to consider and vote
upon the adoption of this Agreement and any other matters required to be
approved by the Company's stockholders for consummation of the Merger and the
transactions contemplated hereby (including any adjournment or postponement, the
"Company Meeting"), and to solicit stockholder approval, as promptly as
practicable after the date hereof. The Company Board has adopted a resolution
contemplated by DGCL Section 251 recommending that the stockholders adopt and
approve this Agreement and, subject to its fiduciary duties, will keep such
resolution in effect and will use all commercially reasonable efforts to obtain
from its stockholders a vote adopting and approving the plan of merger contained
in this Agreement. Unless the Agreement has previously been terminated pursuant
to Article VIII hereof, the Company shall be obligated to hold the Company
Meeting notwithstanding any Acquisition Proposal or other event or circumstance
and the Company agrees that it will not submit any Acquisition Proposal to its
stockholders for a vote.
6.03 Proxy Statement. (a) The Acquiror and the Company will cooperate
in the preparation of a proxy statement and other proxy solicitation
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materials of the Company (the "Proxy Statement"). The Company agrees to file the
Proxy Statement in preliminary form with the SEC as promptly as reasonably
practicable. The Company will advise the Acquiror promptly of the time when the
Proxy Statement and any amendment or supplement to the Proxy Statement has been
filed, and of any request by the SEC for amendment of the Proxy Statement or
comments thereon and responses thereto or requests by the SEC for additional
information. The Company agrees to use its commercially reasonable efforts,
after consultation with the Acquiror, to respond promptly to all such comments
of and requests by the SEC.
(b) Each of the Company and the Acquiror agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in the Proxy Statement and any amendment
or supplement thereto will, at the date of mailing to stockholders and at the
time of the Company Meeting, contain any untrue statement that, at the time and
in the light of the circumstances under which such statement is made, is false
or misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not false or misleading
or necessary to correct any earlier statement in the Proxy Statement or any
amendment or supplement thereto. Each of the Company and the Acquiror further
agrees that if it shall become aware prior to the Effective Time of any
information furnished by it that would cause any of the statements in the Proxy
Statement to be false or misleading with respect to any material fact, or to
omit to state any material fact necessary to make the statements therein not
false or misleading, it will promptly inform the other party thereof and will
take the necessary steps to correct the Proxy Statement.
(c) The Company will use its commercially reasonable efforts to cause
the definitive Proxy Statement and all required amendments and supplements
thereto to be mailed to its stockholders as promptly as practicable after the
date hereof.
6.04 Press Releases. The initial press releases concerning the Merger
and the other transactions contemplated by this Agreement shall be in such form
agreed to in advance by the parties, and thereafter each of the Company and the
Acquiror agrees that it will not, without the prior approval of the other party,
issue any press release or written statement for general circulation relating to
the transactions contemplated hereby (except for any release or statement that,
upon the advice of outside counsel to the Company or the Acquiror, as the case
may be, is required by law or regulation and as to which the Company or the
Acquiror, as the case may be, has used its best efforts to discuss with the
other in advance, provided that such release or statement has not been caused
by, or is not the result of, a previous disclosure by or at the direction of the
Company or the Acquiror, as the case may be, or any of its representatives that
was not permitted by this Agreement).
6.05 Access; Information. (a) Upon reasonable notice and subject to
applicable law relating to the exchange of information, the Company shall afford
the Acquiror and its officers, employees, counsel, accountants and
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other authorized representatives such access during normal business hours
throughout the period prior to the Effective Time to the books, records
(including credit files, Tax Returns and work papers of independent auditors),
properties, personnel and to such other information as it may reasonably request
and, during such period, the Company shall furnish promptly (1) a copy of each
material report, schedule and other document filed by it pursuant to the
requirements of federal or state securities or banking laws, and (2) all other
information concerning its business, properties and personnel as the Acquiror
may reasonably request.
(b) Each of the Company and the Acquiror agrees that it will not, and
will cause its representatives not to, use any information obtained pursuant to
this Section 6.05 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Subject to the requirements of law,
each party will keep confidential, and will cause its representatives to keep
confidential, all information and documents obtained pursuant to this Section
6.05, unless, with respect to the Company and in connection with the
transactions contemplated hereby, such information (1) was already known to such
party, (2) becomes available to such party from other sources not known by such
party to be bound by a confidentiality obligation, (3) is disclosed with the
prior written approval of the party to which such information pertains or (4) is
or becomes readily ascertainable from published information or trade sources.
Each party shall be responsible for any breach of this Section 6.05(b) by its
representatives. In the event that this Agreement is terminated or the
transactions contemplated by this Agreement shall otherwise fail to be
consummated, each party shall promptly cause all copies of documents or extracts
thereof containing information and data as to another party hereto to be
returned to the party which furnished the same, or at the other party's request,
destroyed, and shall cause its representatives to return or, at the other
party's request, destroy all such items.
(c) No investigation by either party of the business and affairs of the
other shall affect or be deemed to modify or waive any representation, warranty,
covenant or agreement in this Agreement or the conditions to either party's
obligation to consummate the transactions contemplated by this Agreement.
6.06 Acquisition Proposals. The Company agrees that it shall not, and
shall cause its representatives, its Subsidiaries and its Subsidiaries'
representatives not to, solicit, encourage or otherwise facilitate inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to any tender or exchange offer, proposal for a merger, sale of
substantially all assets, consolidation or other business combination involving
the Company or any of its Subsidiaries or any proposal or offer to acquire in
any manner a substantial equity interest in, or a substantial portion of the
business, assets or deposits of, the Company or any of its Subsidiaries (any of
the foregoing, other than the transactions contemplated by this Agreement, an
"Acquisition Proposal"); provided that nothing contained in this Agreement shall
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prevent the Company Board from (i) making any disclosure to its stockholders if,
in the good faith judgment of the Company Board, failure so to disclose would be
inconsistent with its obligations under applicable law; (ii) before the date of
the Company Meeting, providing (or authorizing the provision of) information to,
or engaging in (or authorizing) such discussions or negotiations with, any
person who has made a bona fide written Acquisition Proposal received after the
date hereof which did not result from a breach of this Section 6.06; or (iii)
recommending such an Acquisition Proposal to its stockholders if and only to the
extent that, in the case of actions referred to in clause (ii) or (iii), (x)
such Acquisition Proposal is a Superior Proposal, (y) the Company Board, after
having consulted with and considered the advice of outside counsel to the
Company Board, determines in good faith that providing such information or
engaging in such negotiations or discussions or making such recommendation is
required in order to discharge the directors' fiduciary duties to the Company
and its stockholders in accordance with the DGCL and (z) the Company receives
from such person a confidentiality agreement substantially in the form of the
Confidentiality Agreement. For purposes of this Agreement, a "Superior Proposal"
means any Acquisition Proposal by a third party on terms that the Company Board
determines in its good faith judgment, after receiving the advice of its
financial advisors and its legal advisors regarding the prospects for regulatory
approval (the substance of which advice shall be communicated to the Acquiror),
to be more favorable from a financial point of view to the Company and its
stockholders than the Merger and the other transactions contemplated hereby,
after taking into account the likelihood of consummation of such transaction on
the terms set forth therein, taking into account all legal, financial (including
the financing terms of any such proposal), regulatory and other aspects of such
proposal and any other relevant factors permitted under applicable law, after
giving the Acquiror at least five (5) business days to respond to such
third-party Acquisition Proposal once the Board has notified the Acquiror that
in the absence of any further action by the Acquiror it would consider such
Acquisition Proposal to be a Superior Proposal, and then taking into account any
amendment or modification to this Agreement proposed by the Acquiror. The
Company also agrees immediately as of the date hereof to cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than the Acquiror with respect to
any of the foregoing. The Company shall promptly (within 24 hours) advise the
Acquiror following the receipt by it of any Acquisition Proposal and the
material terms thereof (including the identity of the person making such
Acquisition Proposal), and advise the Acquiror of any developments (including
any change in such terms) with respect to such Acquisition Proposal promptly
upon the occurrence thereof. The Company agrees that neither it nor any of its
Subsidiaries shall terminate, amend, modify or waive any provision of or release
any of its rights under any confidentiality or standstill agreement to which it
is a party. The Company shall enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreement, including, but not limited
to, by obtaining injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any court having
jurisdiction.
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Nothing contained in this Section 6.06 or any other provision of this
Agreement will prohibit the Company or the Company Board from notifying any
third party that contacts the Company on an unsolicited basis after the date
hereof concerning an Acquisition Proposal of the Company's obligations under
this Section 6.06.
6.07 Takeover Laws. No party shall knowingly take any action that would
cause the transactions contemplated by this Agreement or the Voting Agreements
to be subject to requirements imposed by any Takeover Law and each of them shall
take all necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement or the Voting
Agreements from, or if necessary challenge the validity or applicability of, any
applicable Takeover Law, as now or hereafter in effect.
6.08 No Rights Triggered. The Company shall take all reasonable steps
necessary to ensure that the entering into of this Agreement and the Voting
Agreements and the consummation of the transactions contemplated hereby and any
other action or combination of actions, or any other transactions contemplated
hereby or thereby, do not and will not result in the grant of any Rights to any
person (a) under the Constitutive Documents of the Company or (b) under any
material Contract to which it or any of its Subsidiaries is a party except, in
each case, as Previously Disclosed or contemplated by this Agreement and the
Voting Agreements.
6.09 Regulatory Applications. (a) The Acquiror and the Company and
their respective Subsidiaries shall cooperate and use their respective
commercially reasonable efforts to prepare all documentation, to effect all
filings and to obtain all permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary to consummate the
transactions contemplated by this Agreement on a timely basis. Each of the
Acquiror and the Company agrees that it will consult with the other party hereto
with respect to the obtaining of all material consents, registrations,
approvals, permits and authorizations of all third parties and Governmental
Authorities necessary or advisable to consummate the transactions contemplated
by this Agreement, and each party will keep the other party apprised of the
status of material matters relating to completion of the transactions
contemplated hereby.
(b) Each of the Acquiror and the Company agrees, upon request, to
furnish the other party with all information concerning itself, its
Subsidiaries, directors, officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party or any of its Subsidiaries
to any third party or Governmental Authority.
6.10 Indemnification. (a) Following the Effective Time and for a period
of six years thereafter, the Acquiror shall, or shall cause the Surviving
Corporation to, indemnify, defend and hold harmless the present and former
directors and officers of the Company and its Subsidiaries (each, an
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"Indemnified Party") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of actions or omissions occurring at or prior to the
Effective Time (including the transactions contemplated by this Agreement),
whether asserted or claimed prior to, at or after the Effective Time (each an
"Indemnifiable Claim"), to the fullest extent that the Company is permitted to
indemnify its directors and officers under applicable law and its Constitutive
Documents as in effect on the date hereof (and the Acquiror shall, or shall
cause the Surviving Corporation to, also advance expenses as incurred to the
fullest extent permitted under applicable law provided the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification);
provided that any determination required to be made with respect to whether such
an officer's or director's conduct complies with the standards set forth under
applicable law and the Company's Constitutive Documents shall be made by
independent counsel reasonably acceptable to both the Indemnified Party and the
Surviving Corporation.
(b) For a period of three years from the Effective Time, the Acquiror
shall use its commercially reasonable efforts to provide (or cause the Surviving
Corporation to provide) that portion of directors' and officers' liability
insurance that serves to reimburse the present and former officers and directors
of the Company or any of its Subsidiaries (determined as of the Effective Time)
with respect to claims against such directors and officers arising from facts or
events which occurred before the Effective Time, which insurance shall contain
at least the same coverage and amounts, and contain terms and conditions no less
advantageous, as that coverage currently provided by the Company; provided,
however, that in no event shall the Acquiror be required to expend more than
twice the current amount spent by the Company (the "Insurance Amount") to
maintain or procure such directors' and officers' insurance coverage; provided,
further, that if the Acquiror is unable to maintain or obtain the insurance
called for by this Section 6.10(b), the Acquiror shall use its commercially
reasonable efforts to obtain as much comparable insurance as is available for
the Insurance Amount; provided, further, that officers and directors of the
Company or any Subsidiary may be required to make application and provide
customary representations and warranties to the Acquiror's insurance carrier for
the purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.10(a), upon learning of an Indemnifiable Claim, shall promptly notify
the Acquiror thereof; provided that the failure so to notify shall not affect
the obligations of the Acquiror under Section 6.10(a) unless and to the extent
that the Acquiror is actually prejudiced as a result of such failure. In the
event of any such Indemnifiable Claim (whether arising before or after the
Effective Time), (1) the Acquiror or the Surviving Corporation shall have the
right to assume the defense thereof and the Acquiror shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
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expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Acquiror or the Surviving Corporation
elects not to assume such defense or counsel for the Indemnified Parties advises
that there are issues that raise conflicts of interest between the Acquiror or
the Surviving Corporation and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and the Acquiror or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
however, that the Acquiror shall be obligated pursuant to this paragraph (c) to
pay for only one firm of counsel for all Indemnified Parties in any jurisdiction
unless the use of one counsel for such Indemnified Parties would present such
counsel with a conflict of interest, (2) the Indemnified Parties will cooperate
in the defense of any such matter and (3) the Acquiror shall not be liable for
any settlement effected without its prior written consent, which consent shall
not be unreasonably withheld; and provided, further, that the Acquiror shall not
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final and non-appealable, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
(d) If the Acquiror or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then and in each case, proper
provision shall be made so that the successors and assigns of the Acquiror shall
assume the obligations set forth in this Section 6.10.
(e) The provisions of this Section 6.10 are intended to be for the
benefit of, and will be enforceable by, each Indemnified Party and his or her
heirs and representatives and are in addition to, and not in substitution for,
any other rights to indemnification or contribution that any such person may
have by contract or otherwise.
6.11 Notification of Certain Matters. (a) Each of the Company and the
Acquiror shall give prompt notice to the other of any fact, event or
circumstance known to it that would reasonably be expected, individually or
taken together with all other facts, events and circumstances known to it, (1)
to result in any Material Adverse Effect with respect to it or (2) to cause or
constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein without giving effect to the Material
Adverse Effect qualifications.
(b) The Company shall promptly notify the Acquiror of any written
notice or other bona fide communication from any person alleging that the
consent of such person is or may be required as a condition to the Merger or the
Bank Merger.
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6.12 Employee Benefits.
(a) From and after the Effective Time, Acquiror shall provide former
employees of the Company who remain as employees of Acquiror or any of its
Subsidiaries with benefits under employee benefit plans (other than stock
options and other equity-based plans) substantially comparable in the aggregate
to those provided to similarly situated employees of Acquiror or its
Subsidiaries, as the case may be. Acquiror shall cause each employee benefit
plan, program, policy or arrangement of Acquiror in which employees of the
Company are eligible to participate to take into account for purposes of
eligibility and vesting (but not for purposes of benefit accrual except with
respect to any plan that provides severance benefits) thereunder the service of
such employees with the Company to the same extent as such service was credited
for such purpose by the Company under an applicable Compensation Plan. Nothing
herein shall limit the ability of Acquiror to amend or terminate any of the
Compensation Plans in accordance with their terms at any time.
(b) If employees of the Company become eligible to participate in a
medical, dental or health plan of Acquiror, Acquiror shall use its commercially
reasonable efforts to cause each such plan to (i) waive any preexisting
condition limitations to the extent such conditions were covered under the
applicable medical, health or dental plans of the Company, (ii) honor under such
plans any deductible, co-payment and out-of-pocket expenses incurred by the
employees and their beneficiaries during the portion of the calendar year prior
to such participation and (iii) waive any waiting period limitation or evidence
of insurability requirement which would otherwise be applicable to such employee
on or after the Effective Time to the extent such employee had satisfied any
similar limitation or requirement under an analogous Compensation Plan prior to
the Effective Time.
(c) If requested by Acquiror at least ten (10) business days prior to
the Effective Time, the Company shall take, or cause to be taken, all actions
necessary to (i) freeze or terminate the 401(k) Plan prior to the Effective
Time, (ii) terminate the ESOP prior to the Effective Time, (iii) freeze benefit
accruals under all of the Company's nonqualified retirement plans, (iv)
eliminate any provision under a nonqualified deferred compensation plan that
would require creation and/or funding of a "rabbi trust" as a result of the
transactions contemplated by this Agreement, (v) make such other amendments to
any nonqualified deferred compensation plan, provided that no such amendment
shall adversely affect participants' accrued benefits (including without
limitation the manner of crediting earnings thereto) or distribution options in
any respect, and/or (vi) freeze the Cash Balance Plan effective as of the
Effective Time (or such later time as required by applicable law). If requested
by Acquiror with respect to (i) and (ii) in the previous sentence, the Company
shall file for a determination letter from the Internal Revenue Service with
respect to the tax-qualified status of the 401(k) Plan and/or the ESOP upon
termination of such plans. Upon receipt of a favorable determination letter that
the ESOP is, at its termination, qualified under the Code, Acquiror shall as
promptly as practicable distribute to each participant the balance in his or her
account;
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provided that if the Internal Revenue Service does not issue any determination
letter by March 31, 2005, Acquiror shall as promptly as practicable thereafter
distribute to each participant the balance in his or her account; provided
further that if the Internal Revenue Service issues any letter or other
communication before March 31, 2005 indicating any deficiency in the form and/or
operation of the ESOP, no distribution shall be made until such deficiency has
been cured and a favorable determination letter received. Acquiror shall take
all commercially reasonably steps to allow participants in the 401(k) Plan to
"roll over" to a "401(k)" plan of the Acquiror any distribution that is eligible
to be rolled over under the Code, including without limitation any distribution
of a promissory note in connection with a loan made under the 401(k) Plan to the
extent legally permissible, provided that such a promissory note may be rolled
over by a participant in such manner only if the participant elects to roll over
to the Acquiror's 401(k) plan his or her entire eligible rollover distribution
received from the 401(k) Plan. Notwithstanding any other provision in this
Agreement to the contrary, a participant in the Company's Deferred Compensation
Plan may defer his or her 2004 incentive bonus payment under such plan in
accordance with his or her previously-made election even if such bonus is
actually paid after the Effective Time. The Company shall provide all
legally-required notices in connection with any of the foregoing provisions of
this Section 6.12(c). The parties hereto shall consult with each other and
cooperate in good faith in effecting all of the foregoing.
(d) Nothing in this Section 6.12 shall be deemed to in any way restrict
the ability of the Surviving Corporation to terminate any employee or terminate,
modify or institute any compensation arrangement or Compensation Plan of the
Surviving Corporation.
(e) Ten days prior to the Effective Time, for each current officer,
employee or director of the Company or its Subsidiaries entitled to receive any
payments or benefits triggered by the Merger, the Company shall deliver to the
Acquiror, in a form reasonably satisfactory to the Acquiror, a general waiver
and release of claims signed by such officer, employee or director. Subject to
payment of amounts due, such release shall provide that if a termination of
employment occurs during a period in which an officer, employee or director is
entitled to the continued provision of benefits triggered by the Merger under
any Compensation Plan (the "CIC Benefits Continuation"), then the Company will
provide such benefits on substantially the same terms and at the same employee
costs as then in effect for the remainder of the period covered by the CIC
Benefits Continuation, and that such period shall be coincident with the period
of required coverage under the Consolidated Omnibus Budget Reconciliation Act of
1986 ("COBRA").
6.13 Certain Adjustments. Upon the request of the Acquiror, the Company
shall (a) consistent with generally accepted accounting principles and
regulatory accounting principles, use its best efforts to record any accounting
adjustments required to conform the (1) loan, litigation and other reserves
(including loan classifications and levels of reserves) and (2) real estate and
securities valuation policies and practices of the Company and its Subsidiaries
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so as to reflect consistently on a mutually satisfactory basis the policies and
practices of the Acquiror and (b) make reasonable adjustments to the corporate
structure of the Company or its direct or indirect subsidiaries and transfer
assets or liabilities between the Company and its Subsidiaries or between
Subsidiaries; provided, however, that the Company shall not be obligated to
record any such accounting adjustments (1) unless and until the Company shall be
satisfied that the conditions to the obligation of the parties to consummate the
Merger will be satisfied or waived on or before the Closing Date and (2) in no
event until the day prior to the Closing Date.
6.14 Intentionally Omitted.
6.15 Regulatory Compliance. In consultation with the Acquiror, the
Company will take all reasonable measures to ensure that the Surviving
Corporation's subsidiary depository institutions will perform at a level of at
least "satisfactory" under the CRA and that the Surviving Corporation and its
subsidiary depository institutions should be deemed "well managed" by their
"appropriate Federal banking agency" (as such term is defined in Section 3(q) of
the Federal Deposit Insurance Act).
6.16 Formation of Acquiror Sub. As soon as reasonably practicable
following the date of this Agreement, the Acquiror shall cause Acquiror Sub to
be duly organized as a direct or indirect wholly owned Subsidiary of the
Acquiror and to become a party to this Agreement by executing and delivering a
supplement hereto.
6.17 Fiscal 2004 Incentive Compensation. If the Effective Time occurs
prior to July 31, 2004 and the Company has not previously paid its accrued
amounts for fiscal 2004 incentive compensation as identified at Section 4.01(g)
hereof, Acquiror shall cause the Surviving Corporation to pay on or before July
31, 2004 incentive compensation payments for fiscal 2004 to officers and
employees of the Company, consistent with the Company's past practice, in an
amount up to but with no requirement that it exceed $1,250,000 in the aggregate.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
obligation of each of the Acquiror, Acquiror Sub and the Company to consummate
the Merger is subject to the fulfillment or written waiver by the Acquiror and
the Company prior to the Effective Time of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been duly adopted
by the affirmative vote of the holders of a majority of the outstanding
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shares of Company Common Stock entitled to vote thereon in accordance with
applicable law and the Company's Constitutive Documents.
(b) Governmental and Regulatory Consents. All approvals and
authorizations of, filings and registrations with, and notifications to, all
Governmental Authorities required for the consummation of the Merger and the
Bank Merger, and for the prevention of any termination of any material right,
privilege, license or agreement of either the Acquiror or the Company or their
respective Subsidiaries, shall have been obtained or made and shall be in full
force and effect and all waiting periods required by law shall have expired;
provided, however, that none of the preceding shall be deemed obtained or made
if it shall be subject to any condition or restriction the effect of which,
together with any other such conditions or restrictions, would be reasonably
expected to have a Material Adverse Effect on the Surviving Corporation, or the
Acquiror after the Effective Time.
(c) No Injunction. No Governmental Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, judgment, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and restrains, enjoins or otherwise
prohibits consummation of the transactions contemplated by this Agreement.
7.02 Conditions to Obligation of the Company. The obligation of the
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of the Acquiror and Acquiror Sub set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (except that representations and warranties
that by their terms speak as of the date of this Agreement or some other date
shall be true and correct only as of such date), and the Company shall have
received a certificate, dated the Closing Date, signed on behalf of the Acquiror
and Acquiror Sub by a senior officer of each respective party to such effect.
(b) Performance of Obligations of the Acquiror. The Acquiror and
Acquiror Sub shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Effective
Time, and the Company shall have received a certificate, dated the Closing Date,
signed on behalf of the Acquiror and Acquiror Sub by a senior officer of each
respective party to such effect.
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7.03 Conditions to Obligation of the Acquiror. The obligations of the
Acquiror and Acquiror Sub to consummate the Merger are also subject to the
fulfillment or written waiver by the Acquiror prior to the Effective Time of
each of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date (except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be true and
correct only as of such date) and the Acquiror shall have received a
certificate, dated the Closing Date, signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to such
effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and the Acquiror
shall have received a certificate, dated the Closing Date, signed on behalf of
the Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to such effect.
(c) Third Party Consents. The Company shall have obtained all consents
or approvals of all persons, other than those covered in paragraph (b) of
Section 7.01 hereto, required for or in connection with the execution, delivery
and performance of this Agreement, the consummation of the Merger or the other
transactions contemplated hereby and such consents or approvals shall be in full
force and effect, unless the failure to obtain any such consent or approval or
of such consent or approval not to be in full force and effect is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Acquiror or the Surviving Corporation.
(d) Resignations. The Acquiror shall have received the resignations of
each director of the Company and each of its Subsidiaries to be effective as of
the Effective Time.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated and the Merger may
be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time, by the
mutual consent of the Acquiror and the Company, if the Board of Directors of
each so determines by vote of a majority of the members of its entire Board.
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(b) Breach. At any time prior to the Effective Time, by the Acquiror or
the Company (and with written notice to the other party), in each case if its
Board of Directors so determines by vote of a majority of the members of its
entire Board, in the event of either: (1) a breach by the other party of any
representation or warranty contained herein, which breach cannot be or has not
been cured within 30 days after the giving of written notice to the breaching
party of such breach; or (2) a breach by the other party of any of the covenants
or agreements contained herein, which breach cannot be or has not been cured
within 30 days after the giving of written notice to the breaching party of such
breach and in each case which breach, individually or in the aggregate with
other such breaches, would cause the conditions set forth in Section 7.03(a) or
(b), in the case of a breach or breaches by the Company, or Section 7.02(a) or
(b), in the case of a breach or breaches by the Acquiror, not to be satisfied or
would reasonably be expected to prevent, materially delay or materially impair
the ability of the Company or the Acquiror to consummate the Merger, the Bank
Merger and the other transactions contemplated by this Agreement.
(c) Delay. At any time prior to the Effective Time, by the Acquiror or
the Company (and with written notice to the other party), in each case if its
Board of Directors so determines by vote of a majority of the members of its
entire Board, in the event that the Merger is not consummated by October 31,
2004 (the "Permitted Termination Date"), except to the extent that the failure
of the Merger then to be consummated arises out of or results from the action or
inaction of the party seeking to terminate pursuant to this Section 8.01(c).
(d) Denial by Governmental Authority. By the Company or the Acquiror
(and with written notice to the other party), in each case if its Board of
Directors so determines by a vote of a majority of the members of its entire
Board, in the event the approval of any Governmental Authority required for
consummation of the Merger, the Bank Merger and the other transactions
contemplated by this Agreement shall have been denied by final nonappealable
action of such Governmental Authority.
(e) Failure to Recommend, Etc. By the Acquiror (and with written notice
to the Company), if (1) at any time prior to the adoption of this Agreement by
the Company's stockholders as contemplated by Section 7.01(a), the Company Board
shall have failed to make its recommendation that the stockholders adopt this
Agreement, withdrawn such recommendation or modified or changed such
recommendation in a manner adverse to the interests of the Acquiror, (2) the
Company Board takes any of the actions described in clause (ii) of the proviso
to Section 6.06 or (3) the Company Board takes any of the actions described in
clause (iii) of the proviso to Section 6.06.
(f) Stockholder Approval. By the Company or the Acquiror if the
required stockholder approval of the Company shall not have been obtained upon a
vote taken thereon at the duly convened Company Meeting.
8.02 Effect of Termination and Abandonment. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to
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this Article VIII, no party to this Agreement shall have any liability or
further obligation to any other party hereunder except (a) as set forth in
Sections 8.03 and 9.01 and (b) that termination will not relieve a breaching
party from liability for any willful breach of this Agreement giving rise to
such termination.
8.03 Termination Fee. (a) As a condition of the Acquiror and Acquiror
Sub's willingness, and in order to induce the Acquiror and Acquiror Sub, to
enter into this Agreement, the Company hereby agrees to pay to the Acquiror, and
the Acquiror shall be entitled to payment of a fee or fees as follows:
(i) $3,670,000 (the "Initial Termination Fee")(it being understood
that such fee is not intended as liquidated damages), which will be
payable if this Agreement is terminated:
(1) by the Acquiror pursuant to clause (1) or (3) of Section
8.01(e);
(2) by the Acquiror or the Company pursuant to Section 8.01(f),
provided that at any time after the date of this Agreement and at or
before the date of the Company Meeting an Acquisition Proposal by a
person other than Acquiror or any of its Subsidiaries (each an
"Acquiror Subsidiary") shall have been publicly announced with respect
to the Company or any of its Subsidiaries (a "Public Proposal"); or
(3) by the Acquiror pursuant to Section 8.01(b), provided that
(1) at any time after the date of this Agreement and before such
termination there shall have been a Public Proposal or an Acquisition
Proposal otherwise communicated to the senior management or board of
directors of the Company with respect to the Company or any of its
Subsidiaries and (2) following the occurrence of such Public Proposal
or Acquisition Proposal so communicated, the Company shall have
breached, other than by an unintentional breach, (and not cured such
breach after notice thereof) any of its covenants or agreements set
forth in Section 6.06; and
(ii) $11,020,000 (the "Subsequent Termination Fee")(it being
understood that such fee is not intended as liquidated damages), which
will be payable if an event or transaction described in paragraphs (1)
or (2) below occurs (each a "Fee Payment Event") after the date
hereof:
(1) the acquisition by any person (other than the Acquiror or any
Acquiror Subsidiary) of beneficial ownership of 25% or more of the
then outstanding Company Common Stock; or
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(2) a Tolling Event described in clause (i) of the definition of
the term "Tolling Event", except that the percentage referred to in
clause (z) of the definition of the term "Acquisition Transaction"
shall be 25%;
provided, however, that the Subsequent Termination Fee shall not be
payable if a Fee Termination Event shall have occurred prior to the
occurrence of a Fee Payment Event.
(b) Each of the following shall be a "Fee Termination Event": (i) the
Effective Time; (ii) termination of this Agreement in accordance with its terms,
other than a Listed Termination, if such termination occurs prior to the
occurrence of a Tolling Event; or (iii) the passage of eighteen (18) months
after termination of this Agreement if such termination follows the occurrence
of a Tolling Event or is a Listed Termination.
(c) The term "Listed Termination" shall mean a termination by the
Acquiror pursuant to Section 8.01(b) (unless the breach giving rise to such
right of termination is not willful on the part of Company, its Affiliates or
representatives).
(d) The term "Tolling Event" shall mean any of the following events or
transactions occurring on or after the date hereof:
(i) The Company or any of its Subsidiaries, without having received
the Acquiror's prior written consent, shall have entered into an
agreement to engage in an Acquisition Transaction with any person
other than the Acquiror or any Acquiror Subsidiary, or the Company
Board shall have recommended that the stockholders of the Company
approve or accept any Acquisition Transaction with any person other
than the Acquiror or an Acquiror Subsidiary;
(ii) Any person other than the Acquiror or any Acquiror Subsidiary
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 15% or more of the outstanding shares of
Company Common Stock;
(iii) The stockholders of the Company shall have voted and failed to
adopt this Agreement at a meeting which has been held for that purpose
or any adjournment or postponement thereof, or such meeting shall not
have been held in violation of this Agreement or shall have been
canceled prior to termination of this Agreement if, prior to such
meeting (or if such meeting shall not have been held or shall have
been canceled, prior to such termination), it shall have been publicly
announced that any person (other than the Acquiror or any Acquiror
Subsidiary) shall have made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction;
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(iv) The Company Board shall have withdrawn, modified or qualified (or
publicly announced its intention to withdraw, modify or qualify) in
any manner materially adverse in any respect to the Acquiror or to
adoption of this Agreement its recommendation that the stockholders of
the Company adopt this Agreement in anticipation of engaging in an
Acquisition Transaction, or the Company or any of its Subsidiaries
shall have authorized, recommended, proposed (or publicly announced
its intention to authorize, recommend or propose) an agreement to
engage in an Acquisition Transaction with any person other than the
Acquiror or an Acquiror Subsidiary;
(v) Any person other than the Acquiror or any Acquiror Subsidiary
shall have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that
would constitute an Acquisition Transaction or have filed a
preliminary proxy statement with the SEC with respect to a potential
vote by such person's stockholders to approve the issuance of shares
to be offered in such an exchange offer;
(vi) The Company shall have willfully breached any covenant or
obligation contained in this Agreement after a proposal is made by a
third party to the Company or its stockholders to engage in an
Acquisition Transaction, and following such breach the Acquiror would
be entitled to terminate this Agreement (whether immediately or after
the giving of notice or passage of time or both); or
(vii) Any person other than the Acquiror or any Acquiror Subsidiary,
without Acquiror's prior written consent, shall have filed an
application or notice with any regulatory or antitrust authority,
which application or notice has been accepted for processing, for
approval to engage in an Acquisition Transaction.
(e) Any payment required to be made under Section 8.03(a)(i) shall be
payable within three business days following such termination and any payment
required to be made under Section 8.03(a)(ii) shall be payable within three
business days following the Fee Payment Event. In any case such payment shall be
made, without setoff, by wire transfer in immediately available funds, to an
account specified by the Acquiror.
(f) The Company acknowledges that the agreements contained in this
Section 8.03 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, the Acquiror would not enter into
this Agreement; accordingly, if the Company fails promptly to pay any amount due
pursuant to this Section 8.03, and, in order to obtain such payment, the
Acquiror commences a suit which results in a judgment against the Company for
the payment set forth in this Section 8.03, the Company shall
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reimburse the Acquiror's costs and expenses (including reasonable attorneys'
fees) in connection with such suit, together with interest on any amount due
pursuant to this Section 8.03 from the date such amount becomes payable until
the date of such payment at the prime rate published in The Wall Street Journal
in effect on the date such payment was required to be made.
(g) The Company shall notify the Acquiror promptly in writing of the
occurrence of any Tolling Event or Fee Payment Event, it being understood that
the giving of such notice by the Company shall not be a condition to the
Acquiror's rights pursuant to this Section 8.03.
ARTICLE IX
MISCELLANEOUS
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement (a) other than those contained in Sections 6.05(b),
8.02, and 8.03 and in this Article IX, shall survive the termination of this
Agreement if this Agreement is terminated prior to the Effective Time, or (b)
other than those contained in Section 6.10 and in this Article IX, shall survive
the Effective Time.
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (a) waived by the party benefited by the provision, or (b)
amended or modified at any time by an agreement in writing executed by both
parties, except that, after adoption and approval of this Agreement by the
stockholders of the Company, no amendment or modification may be made which
under applicable law requires further approval of such stockholders without
obtaining such required further approval.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
9.05 Expenses. Subject to Section 8.03, each party hereto will bear all
expenses incurred by it in connection with this Agreement and the transactions
contemplated hereby.
9.06 Notices. All notices, requests and other communications hereunder
to a party shall be in writing and shall be deemed given (a) on the date of
delivery, if personally delivered or telecopied (with confirmation), (b) on the
first business day following the date of dispatch, if delivered by a recognized
next-day courier service, or (c) on the third business day following the date of
mailing, if mailed by registered or certified mail (return receipt requested),
in
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each case to such party at its address or telecopy number set forth below or
such other address or numbers as such party may specify by notice to the parties
hereto.
If to the Company, to:
Xxxxxxxx X. (Xxxx) XxXxxx
President and Chief Executive Officer
Quaker City Bancorp, Inc.
0000 Xxxxxxxxx Xxx.
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx, Xxxx & Xxxxxxxx LLP
Jamboree Center
0 Xxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Acquiror or Acquiror Sub, to:
Xxxxxxx Xxxxxxxx, President
Banco Popular North America
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to:
Xxxxxxx X. Xxxxxx-Xxxxxx
Popular, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx 000, Xxxxx Xxxxxxxx
Xxxx Xxx, Xxxxxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxx X. Xxxxx
Banco Popular North America
000 Xxxxxxxx-00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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Xxxxxx X. Xxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
9.07 Entire Understanding; No Third-Party Beneficiaries. This Agreement
(together with the Disclosure Schedules, the Voting Agreements and the Exhibits
hereto) represents the entire understanding of the parties hereto with reference
to all the matters encompassed or contemplated herein or agreed to in
contemplation hereof and this Agreement supersedes any and all other oral or
written agreements heretofore made. Except for Section 6.10, insofar as such
Section expressly provides certain rights to the Indemnified Parties identified
therein, nothing in this Agreement, expressed or implied, is intended to confer
upon any person, other than the parties hereto or their respective successors
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
9.08 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned or delegated, in whole or
in part (except by operation of law), by any of the parties hereto without the
prior written consent of each other party hereto, except that the Acquiror and
Acquiror Sub may assign or delegate in their sole discretion any or all of their
rights, interests or obligations under this Agreement to any direct or indirect,
wholly owned subsidiary of the Acquiror, but no such assignment shall relieve
the Acquiror of any of its obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by, the parties hereto and their respective successors and assigns.
9.09 Waiver of Jury Trial. All of the parties hereto irrevocably waive
any and all right to trial by jury in any legal proceeding arising out of or
related to this Agreement or the transactions contemplated hereby.
* * *
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Quaker City Bancorp, Inc.
By: /s/ Xxxxxxxx X. (Xxxx) XxXxxx
--------------------------------------
Name: Xxxxxxxx X. (Xxxx) XxXxxx
Title: President and Chief Executive
Officer
Popular, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President
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EXHIBIT A
LIST OF PERSONS TO EXECUTE VOTING AGREEMENTS
Xxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxx
Xxxxxxx Xxxxxxxx
Xxxxx X. Xxxxxxxxxx
Xxxxxxxx X. (Xxxx) XxXxxx
Xxxxxx X. Xxxxxx
X.X. Xxxxxx
Xxxxxx X. Xxxxxx