AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
by and among
CHARTER ONE FINANCIAL, INC.
CHARTER MICHIGAN BANCORP, INC.
CHARTER ONE BANK F.S.B.
XXXXXXXXXX CORPORATION
and
HOME BANK, F.S.B.
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________________
April 22, 1997
________________
TABLE OF CONTENTS
ARTICLE I
THE MERGER AND RELATED MATTERS
1.1 Merger; Surviving Corporations and Resulting Institution
1.2 Effective Time of the Merger . . . . . . . . .
1.3 Company Merger.. . . . . . . . . . . . . . . .
1.4 Michigan Merger. . . . . . . . . . . . . . . .
1.5 Bank Merger. . . . . . . . . . . . . . . . . .
1.6 Closing. . . . . . . . . . . . . . . . . . . .
1.7 Reservation of Right to Revise Transaction.. .
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COFI
AND CHARTER ONE BANK
2.1 Organization.. . . . . . . . . . . . . . . . .
2.2 Authorization. . . . . . . . . . . . . . . . .
2.3 Conflicts. . . . . . . . . . . . . . . . . . .
2.4 Anti-takeover Provisions Inapplicable. . . . .
2.5 Capitalization.. . . . . . . . . . . . . . . .
2.6 COFI Financial Statements; Material Changes. .
2.7 COFI Subsidiaries. . . . . . . . . . . . . . .
2.8 COFI Filings.. . . . . . . . . . . . . . . . .
2.9 COFI Reports.. . . . . . . . . . . . . . . . .
2.10 Compliance with Laws.. . . . . . . . . . . . .
2.11 Registration Statement; Proxy Statement . . .
2.12 Litigation.. . . . . . . . . . . . . . . . . .
2.13 Licenses.. . . . . . . . . . . . . . . . . . .
2.14 Taxes. . . . . . . . . . . . . . . . . . . . .
2.15 Insurance. . . . . . . . . . . . . . . . . . .
2.16 Loans; Investments.. . . . . . . . . . . . . .
2.17 Allowance for Possible Loan Losses . . . . . .
2.18 COFI Benefit Plans.. . . . . . . . . . . . . .
2.19 Compliance With Environmental Laws . . . . . .
2.20 Contracts and Commitments. . . . . . . . . . .
2.21 Defaults.. . . . . . . . . . . . . . . . . . .
2.22 Operations Since December 31, 1996 . . . . . .
2.23 Undisclosed Liabilities. . . . . . . . . . . .
2.24 Assets.. . . . . . . . . . . . . . . . . . . .
2.25 Indemnification. . . . . . . . . . . . . . . .
2.26 Insider Interests. . . . . . . . . . . . . . .
2.27 Brokers and Finders. . . . . . . . . . . . . .
2.28 Accuracy of Information. . . . . . . . . . . .
2.29 Governmental Approvals and Other Conditions. .
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXXXXXX AND HOME BANK
3.1 Organization. . . . . . . . . . . . . . . . .
3.2 Authorization. . . . . . . . . . . . . . . . .
3.3 Conflicts. . . . . . . . . . . . . . . . . . .
3.4 Anti-takeover Provisions Inapplicable. . . . .
3.5 Capitalization and Stockholders. . . . . . . .
3.6 Xxxxxxxxxx Financial Statements; Material Changes
3.7 Xxxxxxxxxx Subsidiaries. . . . . . . . . . . .
3.8 Xxxxxxxxxx Filings.. . . . . . . . . . . . . .
3.9 Xxxxxxxxxx Reports.. . . . . . . . . . . . . .
3.10 Compliance With Laws.. . . . . . . . . . . . .
3.11 Registration Statement: Proxy Statement. . . .
3.12 Litigation.. . . . . . . . . . . . . . . . . .
3.13 Licenses. . . . . . . . . . . . . . . . . . .
3.14 Taxes. . . . . . . . . . . . . . . . . . . . .
3.15 Insurance. . . . . . . . . . . . . . . . . . .
3.16 Loans; Investments.. . . . . . . . . . . . . .
3.17 Allowance for Possible Loan Losses . . . . . .
3.18 Xxxxxxxxxx Benefit Plans.. . . . . . . . . . .
3.19 Compliance with Environmental Laws . . . . . .
3.20 Contracts and Commitments. . . . . . . . . . .
3.21 Defaults . . . . . . . . . . . . . . . . . . .
3.22 Operations Since December 31, 1996 . . . . . .
3.23 Corporate Records. . . . . . . . . . . . . . .
3.24 Undisclosed Liabilities. . . . . . . . . . . .
3.25 Assets.. . . . . . . . . . . . . . . . . . . .
3.26 Indemnification. . . . . . . . . . . . . . . .
3.27 Insider Interests. . . . . . . . . . . . . . .
3.28 Registration Obligations.. . . . . . . . . . .
3.29 Regulatory, Tax and Accounting Matters . . . .
3.30 Brokers and Finders. . . . . . . . . . . . . .
3.31 Accuracy of Information. . . . . . . . . . . .
3.32 Fairness Opinion.. . . . . . . . . . . . . . .
3.33 Governmental Approvals and Other Conditions. .
ARTICLE IV
COVENANTS OF XXXXXXXXXX
4.1 Business in Ordinary Course. . . . . . . . . .
4.2 Conforming Accounting and Reserve Policies; Restructuring
Expenses. . . . . . . . . . . . . . . . . . .
4.3 Certain Actions. . . . . . . . . . . . . . . .
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Inspection of Records; Confidentiality . . . .
5.2 Registration Statement; Stockholder Approval .
5.3 Agreements of Affiliates.. . . . . . . . . . .
5.4 Expenses.. . . . . . . . . . . . . . . . . . .
5.5 Cooperation. . . . . . . . . . . . . . . . . .
5.6 Regulatory Applications. . . . . . . . . . . .
5.7 Financial Statements and Reports . . . . . . .
5.8 Notice.. . . . . . . . . . . . . . . . . . . .
5.9 Press Release. . . . . . . . . . . . . . . . .
5.10 Delivery of Supplements to Disclosure Schedules
5.11 Litigation Matters.. . . . . . . . . . . . . .
5.12 Tax Opinion. . . . . . . . . . . . . . . . .
5.13 Written Agreements with Employees; Benefits and Related
Matters. . . . . . . . . . . . . . . . . . . .
5.14 Reservation of Shares to Satisfy Xxxxxxxxxx Stock
Options. . . . . . . . . . . . . . . . . . . .
5.15 Nasdaq Listing. . . . . . . . . . . . . . . .
5.16 Directors' and Officers' Indemnification Insurance.
5.17 Reports to the SEC . . . . . . . . . . . . . .
ARTICLE VI
CONDITIONS
6.1 Conditions to the Obligations of COFI, Charter Michigan
and Charter One Bank . . . . . . . . . . . . .
6.2 Conditions to the Obligations of Xxxxxxxxxx and Home
Bank . . . . . . . . . . . . . . . . . . . . .
6.3 Conditions to the Obligations of the Parties .
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
7.1 Termination. . . . . . . . . . . . . . . . . .
7.2 Liabilities and Remedies; Break-Up Fee . . . .
7.3 Survival of Agreements.. . . . . . . . . . . .
7.4 Amendment. . . . . . . . . . . . . . . . . . .
7.5 Waiver.. . . . . . . . . . . . . . . . . . . .
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival.. . . . . . . . . . . . . . . . . . .
8.2 Notices. . . . . . . . . . . . . . . . . . . .
8.3 Applicable Law . . . . . . . . . . . . . . . .
8.4 Headings, Etc. . . . . . . . . . . . . . . . .
8.5 Severability.. . . . . . . . . . . . . . . . .
8.6 Entire Agreement; Binding Effect; Non-Assignment;
Counterparts . . . . . . . . . . . . . . . . .
8.7 No Employment Solicitation . . . . . . . . . .
8.8 Additional Party . . . . . . . . . . . . . . .
EXHIBIT LIST
Exhibit A - Form of Voting Agreement
Exhibit B - Directors of Resulting Institution
Exhibit C - Home and Other Offices of Resulting Institution
Exhibit D - Form of Affiliate Agreement
Exhibit E - Form of Xxxx Xxxxxx Parks L.L.P. Legal Opinion
Exhibit F - Form of Silver, Xxxxxxxx & Taff, L.L.P. Legal Opinion
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
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THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this
"Agreement") dated April 22, 1997, is by and among Charter One
Financial, Inc., a Delaware corporation ("COFI"), Charter Michigan
Bancorp, Inc., a Michigan corporation and a wholly owned first-
tier subsidiary of COFI ("Charter Michigan"), Charter One Bank
F.S.B., a federally chartered savings bank and a wholly owned
subsidiary of Charter Michigan ("Charter One Bank"), Xxxxxxxxxx
Corporation, an Ohio corporation ("Xxxxxxxxxx"), and Home Bank,
F.S.B., a federally chartered savings bank and a wholly owned
first-tier subsidiary of Xxxxxxxxxx ("Home Bank").
COFI , Charter One Bank, Charter Michigan, Xxxxxxxxxx and
Home Bank wish to provide for the terms and conditions of the
following described business combinations in which a newly formed
Ohio business corporation and first-tier subsidiary of COFI
("Merger Sub") will be merged (the "Company Merger") with and into
Xxxxxxxxxx, followed immediately by the merger (the "Michigan
Merger") of Xxxxxxxxxx into Charter Michigan and the merger (the
"Bank Merger") of Home Bank with and into Charter One Bank. The
Company Merger, the Michigan Merger and the Bank Merger are
collectively referred to herein as the "Merger."
B. For federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended
("Code"), and this Agreement shall constitute a plan of
reorganization pursuant to Section 368 of the Code.
C. For accounting purposes, it is intended that the
Merger shall be accounted for as a pooling of interests.
D. The parties hereto desire to make certain
representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various
conditions to the Merger.
E. Concurrently with the execution and delivery of this
Agreement, and as a condition to and inducement for COFI and
Charter One Bank to enter into this Agreement, COFI and each of
the directors of Xxxxxxxxxx have entered into voting agreements in
the form attached hereto as Exhibit A ("Voting Agreements").
Accordingly, and in consideration of the representations,
warranties, covenants, agreements and conditions herein contained,
the parties hereto agree as follows:
ARTICLE I
THE MERGER AND RELATED MATTERS
1.1 Merger; Surviving Corporations and Resulting
---------------------------------------------
Institution. Subject to the terms and conditions of this
-----------
Agreement, and pursuant to the provisions of the Michigan Business
Corporation Act ("MBCA"), the Ohio General Corporation Law
("OGCL"), the Federal Deposit Insurance Act ("FDIA"), the Home
Owners' Loan Act ("HOLA") and the rules and regulations
promulgated under HOLA ("Thrift Regulations"), (a) at the
Effective Time (as defined in Section 1.2 hereof), Merger Sub
shall be merged with and into Xxxxxxxxxx pursuant to the terms and
conditions set forth herein, (b) immediately after the Effective
Time, Xxxxxxxxxx shall be merged with and into Charter Michigan
pursuant to the terms and conditions set forth herein and (c)
thereafter at the Bank Merger Effective Time (as defined in
Section 1.2 hereof), Home Bank shall be merged with and into
Charter One Bank pursuant to the terms and conditions set forth
herein. Upon the consummation of the Company Merger, the separate
corporate existence of Merger Sub shall cease and Xxxxxxxxxx shall
continue as the surviving corporation under the laws of the State
of Ohio. Upon consummation of the Michigan Merger, the separate
corporate existence of Xxxxxxxxxx shall cease and Charter Michigan
shall continue as the surviving corporation under the laws of the
State of Michigan. Upon consummation of the Bank Merger, the
separate corporate existence of Home Bank shall cease and Charter
One Bank shall continue as the resulting institution under the
laws of the United States of America. The name of Xxxxxxxxxx as
the surviving corporation of the Company Merger shall remain
"Xxxxxxxxxx Corporation". From and after the Effective Time,
Xxxxxxxxxx, as the surviving corporation of the Company Merger,
shall possess all of the properties and rights and be subject to
all of the liabilities and obligations of Merger Sub and
Xxxxxxxxxx, all as more fully described in the OGCL. The name of
Charter Michigan as the surviving corporation of the Michigan
Merger shall remain "Charter Michigan Bancorp, Inc." From and
after the effective time of the Michigan Merger, Charter Michigan,
as the surviving corporation of the Michigan Merger, shall possess
all of the properties and rights and be subject to all of the
liabilities and obligations of Charter Michigan and Xxxxxxxxxx,
all as more fully described in the MBCA and OGCL. The name of
Charter One Bank, as the resulting institution of the Bank Merger,
shall remain "Charter One Bank F.S.B.". From and after the Bank
Merger Effective Time, Charter One Bank, as the resulting
institution of the Bank Merger, shall possess all of the
properties and rights and be subject to all of the liabilities and
obligations of Charter One Bank and Home Bank (including any
liquidation account of Home Bank established in connection with
its conversion from mutual to stock form), all as more fully
described in the Thrift Regulations.
1.2 Effective Time of the Merger. As soon as practicable
----------------------------
after each of the conditions set forth in Article VI hereof have
been satisfied or waived, the parties will file, or cause to be
filed, with the Ohio Secretary of State and the Michigan
Department of Commerce and the Office of Thrift Supervision
("OTS") such certificates of merger, articles of combination and
other documents as they may deem necessary or appropriate for the
Company Merger, the Michigan Merger and the Bank Merger, which
certificates of merger, articles of combination and other
documents shall in each case be in the form required by and
executed in accordance with the applicable provisions of the OGCL,
MCBA and the Thrift Regulations, respectively. The Company Merger
shall become effective at the time the certificate of merger for
such merger is filed with the Ohio Secretary of State ("Effective
Time"). The Michigan Merger shall become effective at the time
the certificate(s) of merger for such merger are filed with the
Ohio Secretary of State and the Michigan Department of Commerce.
The Bank Merger shall become effective at the time the articles of
combination for such merger are endorsed by the Secretary of the
OTS pursuant to the Thrift Regulations ("Bank Merger Effective
Time"). The parties shall cause the Company Merger to become
effective immediately prior to the Michigan Merger, and the
Michigan Merger to become effective immediately prior to the Bank
Merger.
1.3 Company Merger.
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A. Conversion of Xxxxxxxxxx Stock. At the Effective
-----------------------------
Time:
(i) Each share of common stock of Xxxxxxxxxx,
$.01 par value per share (the "Xxxxxxxxxx Common Stock"), issued
and outstanding immediately prior thereto (except for Dissenting
Shares, if applicable, as defined in Section 1.3(d) hereof) shall,
by virtue of the Company Merger and without any action on the part
of the holder thereof, but subject to Section 1.3(f) hereof, be
converted into the right to receive shares common stock of COFI,
par value $.01 per share ("COFI Common Stock") at the Exchange
Ratio (as defined in Section 1.3(b)), including the corresponding
number of rights associated with the COFI Common Stock pursuant to
the Rights Agreement dated November 20, 1989, as amended on May
26, 1995, between COFI and The First National Bank of Boston as
Rights Agent.
Notwithstanding any other provision of this Agreement,
any shares of Xxxxxxxxxx Common Stock issued and outstanding
immediately prior to the Effective Time which are then owned
beneficially or of record by COFI, Charter One Bank, Xxxxxxxxxx,
Home Bank or by any direct or indirect Subsidiary (as hereinafter
defined) of any of them or held in the treasury of Xxxxxxxxxx
(other than any shares of Xxxxxxxxxx Common Stock held (A)
directly or indirectly in trust accounts, managed accounts and the
like, or otherwise held in a fiduciary capacity, that are
beneficially owned by third parties or (B) in respect of a debt
previously contracted) shall, by virtue of the Company Merger, be
canceled without payment of any consideration therefor and without
any conversion thereof.
(ii) Each share of Merger Sub common stock
issued and outstanding immediately prior to the Effective Time
shall be automatically converted into an identical number of
issued and outstanding shares of Xxxxxxxxxx common stock after
the Effective Time.
(iii) The holders of certificates formerly
representing shares of Xxxxxxxxxx Common Stock shall cease to have
any rights as stockholders of Xxxxxxxxxx, except such rights, if
any, as they may have pursuant to the OGCL. Except as provided
above, until certificates representing shares of Xxxxxxxxxx Common
Stock are surrendered for exchange, the certificates shall, after
the Effective Time, represent for all purposes only the right to
receive the number of whole shares of COFI Common Stock into which
such shares of Xxxxxxxxxx Common Stock shall have been converted
by the Company Merger as provided above and the right to receive
the cash value of any fraction of a share of COFI Common Stock as
provided below (collectively, the "Merger Consideration").
(b) Exchange Ratio.
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(i) If the Average COFI Stock Price (as
hereinafter defined) is equal to or greater than $41.09 and less
than or equal to $55.60, then the Exchange Ratio shall be (rounded
to the fourth decimal place) (A) $27.00, divided by (B) the
Average COFI Stock Price. The "Average COFI Stock Price" means
the average (rounded down to the nearest whole cent) of the
closing sale price of one share of COFI Common Stock on the Nasdaq
National Market for the 20 consecutive full trading days ending on
the fifth business day immediately prior to the Closing Date.
(ii) If the Average COFI Stock Price is less
than $41.09 but equal to or greater than $38.05, then the Exchange
Ratio shall be .6571.
(iii) If the Average COFI Stock Price is less
than $38.05 but equal to or greater than $36.55, then the Exchange
Ratio shall be (rounded to the fourth decimal place) (A) $25.00,
divided by (B) the Average COFI Stock Price.
(iv) If the Average COFI Stock Price is less
than $36.55, then subject to the provisions of Section 7.1(g), the
Exchange Ratio shall be .6840.
(v) If the Average COFI Stock Price is greater
than $55.60, then the Exchange Ratio shall be .4856.
(vi) If, subsequent to the date of this
Agreement but prior to the Effective Time, the outstanding shares
of COFI Common Stock shall, through a reclassification,
recapitalization, stock dividend, stock split or reverse stock
split have been increased, decreased, changed into or exchanged
for a different number or kind of shares or securities,
appropriate adjustment will be made to the Exchange Ratio.
(c) Reservation of Shares. Prior to the Effective
---------------------
Time, the Board of Directors of COFI shall reserve for issuance a
sufficient number of shares of COFI Common Stock for the purpose
of issuing its shares to the stockholders of Xxxxxxxxxx in
accordance herewith.
(d) Dissenting Shares. Any shares of Xxxxxxxxxx
-----------------
Common Stock held by a holder who dissents from the Company Merger
in accordance with Section 1701.85 of the OGCL shall be herein
called "Dissenting Shares". Notwithstanding any other provision
of this Agreement, any Dissenting Shares shall not, after the
Effective Time, be entitled to vote for any purpose or receive any
dividends or other distributions and shall be entitled only to
such rights as are afforded in respect of Dissenting Shares
pursuant to the OGCL.
(e) Exchange of Xxxxxxxxxx Common Stock.
-----------------------------------
(i) As soon as reasonably practicable after the
Effective Time, holders of record of certificates formerly
representing shares of Xxxxxxxxxx Common Stock ("Certificates")
shall be instructed to tender such Certificates to an independent
exchange agent to be selected by COFI (the "Exchange Agent")
pursuant to a letter of transmittal that COFI shall deliver or
cause to be delivered to such holders. Such letter of transmittal
shall specify that risk of loss and title to Certificates shall
pass only upon acceptance of such Certificates by COFI or the
Exchange Agent.
(ii) After the Effective Time, each holder of a
Certificate that surrenders such Certificate to COFI or the
Exchange Agent will, upon acceptance thereof by COFI or the
Exchange Agent, be entitled to the Merger Consideration payable in
respect of the shares represented thereby.
(iii) COFI or the Exchange Agent shall accept
Certificates upon compliance with such reasonable terms and
conditions as COFI or the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with customary exchange
practices. Certificates shall be appropriately endorsed or
accompanied by such instruments of transfer as COFI or the
Exchange Agent may reasonably require.
(iv) Each outstanding Certificate, other than
those representing Dissenting Shares, shall until duly surrendered
to COFI or the Exchange Agent be deemed to evidence the right to
receive the Merger Consideration.
(v) After the Effective Time, holders of
Certificates shall cease to have rights with respect to the
Xxxxxxxxxx Common Stock previously represented by such
Certificates, and their sole rights (other than the holders of
Certificates representing Dissenting Shares) shall be to exchange
such Certificates for the Merger Consideration. At the Effective
Time, Xxxxxxxxxx shall deliver a certified copy of a list of its
stockholders to COFI or the Exchange Agent. After the Effective
Time, there shall be no further transfer on the records of
Xxxxxxxxxx of Certificates, and if such Certificates are presented
to Xxxxxxxxxx for transfer, they shall be canceled against
delivery of the Merger Consideration. COFI shall not be obligated
to deliver the Merger Consideration to any holder of Xxxxxxxxxx
Common Stock until such holder surrenders the Certificates as
provided herein. No dividends declared will be remitted to any
person entitled to receive COFI Common Stock under this Agreement
until such person surrenders the Certificate representing the
right to receive such COFI Common Stock, at which time such
dividends on whole shares of COFI Common Stock with a record date
on or after the Effective Time shall be remitted to such person,
without interest and less any taxes that may have been imposed
thereon. Certificates surrendered for exchange by any person
constituting an "affiliate" of Xxxxxxxxxx for purposes of Rule 145
under the Securities Act of 1933 and the rules and regulations
thereunder (the "Securities Act") shall not be exchanged for
certificates representing COFI Common Stock until COFI has
received a written agreement from such person as specified in
Section 5.3. Neither the Exchange Agent nor any party to this
Agreement nor any affiliate thereof shall be liable to any holder
of Xxxxxxxxxx Common Stock represented by any Certificate for any
consideration paid to a public official pursuant to applicable
abandoned property, escheat or similar laws. COFI and the
Exchange Agent shall be entitled to rely upon the stock transfer
books of Xxxxxxxxxx to establish the identity of those persons
entitled to receive consideration specified in this Agreement,
which books shall be conclusive with respect thereto. In the
event of a dispute with respect to ownership of stock represented
by any Certificate, COFI or the Exchange Agent shall be entitled
to deposit any consideration in respect thereof in escrow with an
independent third party and thereafter be relieved with respect to
any claims thereto.
(vi) If the Merger Consideration is to be
issued to a person other than a person in whose name a surrendered
Certificate is registered, it shall be a condition of issuance
that the surrendered Certificate shall be properly endorsed or
otherwise in proper form for transfer and that the person
requesting such issuance shall pay to COFI or the Exchange Agent
any required transfer or other taxes or establish to the
satisfaction of COFI or the Exchange Agent that such tax has been
paid or is not applicable.
(vii) In the event any Certificate shall have
been lost, stolen or destroyed, the owner of such lost, stolen or
destroyed Certificate shall deliver to COFI or the Exchange Agent
an affidavit stating such fact, in form satisfactory to COFI, and,
at COFI's discretion, a bond in such reasonable sum as COFI or the
Exchange Agent may direct as indemnity against any claim that may
be made against COFI or Xxxxxxxxxx or its successor or any other
party with respect to the Certificate alleged to have been lost,
stolen or destroyed. Upon such delivery, the owner shall have the
right to receive the Merger Consideration with respect to the
shares represented by the lost, stolen or destroyed Certificate.
(f) No Fractional Shares. Notwithstanding any other
--------------------
provision of this Agreement, neither certificates nor scrip for
fractional shares of COFI Common Stock shall be issued in the
Company Merger. Each holder who otherwise would have been
entitled to a fraction of a share of COFI Common Stock shall
receive in lieu thereof cash (without interest) in an amount
determined by multiplying the fractional share interest to which
such holder would otherwise be entitled by the COFI Share Price on
the last business day preceding the Effective Time. The "COFI
Share Price" shall mean the closing sale price (rounded down to
the nearest whole cent) of one share of COFI Common Stock as
reported on the Nasdaq National Market. No such holder shall be
entitled to dividends, voting rights or any other rights in
respect of any fractional share interest.
(g) Stock Options. The Home Bank Stock Compensation
-------------
Plan including Plans I and II thereto ("1985 Option Plan") and the
Xxxxxxxxxx 1995 Stock Option Plan ("1995 Option Plan") and each
option granted thereunder outstanding on the date hereof and
remaining outstanding immediately prior to the Effective Time
shall, at the Effective Time, be assumed by COFI and each such
option shall be converted automatically into an option to purchase
shares of COFI Common Stock in an amount and at an exercise price
determined as provided below (and otherwise subject to the terms
of the 1985 Option Plan or 1995 Option Plan, whichever is
applicable):
(i) the number of shares of COFI Common Stock
to be subject to the new option shall be equal to the product of
the number of shares of Xxxxxxxxxx Common Stock subject to the
original option and the Exchange Ratio, provided that any
fractional share of COFI Common Stock resulting from such
multiplication shall be rounded down to the nearest share; and
(ii) the exercise price per share of COFI
Common Stock under the new option shall be equal to the exercise
price per share of Xxxxxxxxxx Common Stock under the original
option divided by the Exchange Ratio, provided that such exercise
price shall be rounded down to the nearest cent.
The adjustment provided herein with respect to any
options which are "incentive stock options" (as defined in Section
422 of the Code) shall be and is intended to be effected in a
manner which is consistent with Section 424(a) of the Code. The
duration and other terms of the new option shall be the same as
the original option, except that all references to Xxxxxxxxxx
shall be deemed to be references to COFI.
(h) Articles of Incorporation and Code of
-------------------------------------
Regulations of the Surviving Corporation. The Articles of
----------------------------------------
Incorporation and Code of Regulations of Xxxxxxxxxx, as in effect
immediately prior to the Effective Time, shall be the Articles of
Incorporation and Code of Regulations of Xxxxxxxxxx, as the
surviving corporation of the Company Merger, until either is
thereafter amended in accordance with applicable law.
(i) Directors and Officers of the Surviving
------------------------------------------------
Corporation. The directors and officers of Merger Sub immediately
-----------
prior to the Effective Time shall be the directors and officers of
Xxxxxxxxxx, as the surviving corporation of the Company Merger,
until their respective successors shall be duly elected and
qualified or otherwise duly selected.
1.4 Michigan Merger.
---------------
(a) Cancellation of Xxxxxxxxxx Common Stock. At the
---------------------------------------
effective time of the Michigan Merger, each share of common stock
of Xxxxxxxxxx issued and outstanding immediately prior thereto
shall, by virtue of the Michigan Merger, be canceled. No new
shares of capital stock or other securities or obligations of
Charter Michigan shall be issued with respect to or in exchange
for such canceled shares, and such canceled shares of Xxxxxxxxxx
common stock shall not be converted into capital stock or other
securities or obligations of Charter Michigan.
(b) Articles of Incorporation and Bylaws of the
------------------------------------------------
Surviving Corporation. The Articles of Incorporation and Bylaws
---------------------
of Charter Michigan, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation and Bylaws
of Charter Michigan, as the surviving corporation of the Michigan
Merger, until either is thereafter amended in accordance with
applicable law.
(c) Directors and Officers of the Surviving
------------------------------------------------
Corporation. The directors and officers of Charter Michigan
-----------
immediately prior to the Effective Time shall be the directors and
officers of Charter Michigan, as the surviving corporation of the
Michigan Merger, until their respective successors shall be duly
elected and qualified or otherwise duly selected.
(d) Service of Process. At the effective time of
------------------
the Michigan Merger, Charter Michigan, as the surviving
corporation of the Michigan Merger, consents to be sued and served
with process in the State of Ohio and irrevocably appoints the
Secretary of State of the State of Ohio as its agent to accept
service of process in any proceeding in the State of Ohio to
enforce against it any obligation of Xxxxxxxxxx or to enforce the
right of the holders of Dissenting Shares.
(e) Additional Filing Requirements. Charter
------------------------------
Michigan, as the surviving corporation of the Michigan Merger,
does not intend to transact business in the State of Ohio and does
not desire to be licensed to transact business in the State of
Ohio. Accordingly, at the time a certificate of merger relating
to the Michigan Merger is filed with the Secretary of State of the
State of Ohio, it shall be accompanied by the affidavits,
receipts, certificates or other evidence required by Division (H)
of Section 1701.86 of the OGCL with respect to Xxxxxxxxxx.
(f) Principal Office. The location of the principal
----------------
office of Charter Michigan, as the surviving corporation of the
Michigan Merger, in the State of Michigan is 00000 Xxxxxxxx
Xxxxxx, 0xx Xxxxx, Xxxxxxxx, Xxxxxxxx 00000..
1.5 Bank Merger.
-----------
(a) Cancellation of Home Bank Common Stock. At the
--------------------------------------
Bank Merger Effective Time, each share of common stock of Home
Bank ("Home Bank Common Stock") issued and outstanding immediately
prior thereto shall, by virtue of the Bank Merger, be canceled.
No new shares of capital stock or other securities or obligations
of Charter One Bank shall be issued with respect to or in exchange
for such canceled shares, and such canceled shares of Home Bank
Common Stock shall not be converted into capital stock or other
securities or obligations of Charter One Bank.
(b) Charter and Bylaws of the Resulting Institution.
-----------------------------------------------
The charter and bylaws of Charter One Bank, as in effect
immediately prior to the Bank Merger Effective Time, shall,
without any change, be the charter and bylaws of Charter One Bank,
as the resulting institution of the Bank Merger, until either is
thereafter amended in accordance with applicable law.
(c) Directors of the Resulting Institution. The
--------------------------------------
directors of Charter One Bank, as the resulting institution of the
Bank Merger, shall be those persons listed in Exhibit B to this
Agreement. Such directors shall continue in office until their
successors are duly elected and qualified or otherwise duly
selected.
(d) Offices of the Resulting Institution. The home
------------------------------------
and other offices of Charter One Bank, as the resulting
institution of the Bank Merger, shall be as listed in Exhibit C to
this Agreement.
1.6 Closing. Subject to the provisions of Article VI
-------
hereof, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place as soon as practicable
after satisfaction or waiver of all of the conditions to Closing,
and shall be at 10:00 a.m. on the first business day of the first
calendar month following the satisfaction of all of the conditions
to Closing, at the executive offices of COFI or at such other
date, time and location as is mutually agreed to by COFI and
Xxxxxxxxxx, but in no event prior to September 1, 1997. The date
on which the Closing actually occurs is herein referred to as the
"Closing Date".
1.7 Reservation of Right to Revise Transaction. After
------------------------------------------
consultation with Xxxxxxxxxx, XXXX shall have the unilateral right
to change the method of effecting the Merger (including without
limitation the provisions of this Article I), to the extent
permitted by applicable law and to the extent it deems such change
to be desirable, provided, however, that no such change shall (a)
alter or change the amount or kind of the Merger Consideration or
the treatment of stock options as set forth in Section 1.3(g)
hereof, (b) diminish the benefits to be received by the directors,
officers or employees of Xxxxxxxxxx and Home Bank as set forth in
this Agreement or in any other agreements between the parties made
in connection with this Agreement, (c) materially impede or delay
the consummation of the Company Merger or (d) adversely affect the
tax treatment of Xxxxxxxxxx stockholders as a result of receiving
the Merger Consideration. COFI may exercise this right of
revision by giving written notice thereof in the manner provided
in Section 8.2 of this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COFI AND CHARTER ONE BANK
COFI and Charter One Bank jointly and severally represent and
warrant to Xxxxxxxxxx and Home Bank that:
2.1 Organization.
------------
(a) COFI is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority, corporate and
otherwise, to own, operate and lease its assets and properties and
to carry on its business substantially as it has been and is now
being conducted. COFI is duly qualified to do business and is in
good standing in each jurisdiction where the character of the
assets or properties owned or leased by it or the nature of the
business transacted by it requires that it be so qualified, except
where the failure to so qualify would not have a Material Adverse
Effect (as defined in Section 2.1(b) hereof)) on COFI or its
ability to consummate the transactions contemplated herein. COFI
has all requisite corporate power and authority to enter into this
Agreement and, subject to the receipt of all requisite regulatory
approvals and the expiration of applicable waiting periods, to
consummate the transactions contemplated hereby. COFI is duly
registered as a savings and loan holding company under HOLA.
(b) As used in this Agreement, the term "Material
Adverse Effect" with respect to COFI or Xxxxxxxxxx means any
condition, event, change or occurrence that has or may reasonably
be expected to have a material adverse effect on the condition
(financial or otherwise), properties, business, operations,
assets or deposit liabilities of such entity taken together with
its affiliated entities on a consolidated basis; it being
understood that a Material Adverse Effect shall not include: (i)
a change with respect to, or effect on, such entity and its
Subsidiaries resulting from a change in law, rule, regulation,
generally accepted accounting principles or regulatory accounting
principles, as such would apply to the financial statements of
such entity on a consolidated basis; (ii) a change with respect
to, or effect on, such entity and its Subsidiaries resulting from
expenses (such as legal, accounting and investment bankers' fees)
incurred in connection with this Agreement; (iii) a change with
respect to, or effect on, such entity and its Subsidiaries
resulting from any other matter affecting depository institutions
generally including, without limitation, changes in general
economic conditions and changes in prevailing interest and deposit
rates; or (iv) in the case of Xxxxxxxxxx, any financial change
resulting from adjustments taken pursuant to Section 4.2 hereof.
2.2 Authorization. The execution, delivery and
-------------
performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved and
authorized by the Boards of Directors of COFI, Charter Michigan
and Charter One Bank, and no other corporate action on their part
is required to be taken. This Agreement has been duly executed
and delivered by COFI, Charter Michigan and Charter One Bank and
constitutes the valid and binding obligation of each of them and
is enforceable against each of them, except to the extent that
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws or
equitable principles or doctrines.
2.3 Conflicts. Subject to the second sentence of this
---------
Section 2.3, the execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby
will not, conflict with or result in any violation, breach or
termination of, or default or loss of a material benefit under, or
permit the acceleration of any obligation under, or result in the
creation of any material lien, charge or encumbrance on any of the
property or assets under, any provision of the Certificate of
Incorporation or Bylaws of COFI or similar documents of any COFI
Subsidiary or any mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to COFI or any COFI Subsidiary or their
respective properties, other than any such conflicts, violations
or defaults which (i) will be cured or waived prior to the
Effective Time; (ii) are not material to the conduct of business
or operations of COFI or any COFI Subsidiary; or (iii) are
disclosed in Section 2.3 of that certain confidential writing
delivered by COFI to Xxxxxxxxxx within two business days prior to
the date hereof (the "COFI Disclosure Schedule"). No consent,
approval, order or authorization of, or registration, declaration
or filing with, any federal or state governmental authority is
required by or with respect to COFI, Charter Michigan or Charter
One Bank, in connection with the execution and delivery of this
Agreement or the consummation by them of the transactions
contemplated hereby except for: (a) the filing of all required
regulatory applications by COFI, Xxxxxxxxxx and/or their
respective Subsidiaries for approval of the transactions
contemplated by this Agreement; (b) the filing by COFI of the
registration statement relating to the COFI Common Stock to be
issued pursuant to this Agreement ("Registration Statement") with
the United States Securities and Exchange Commission ("SEC") and
various blue sky authorities, which Registration Statement shall
include the prospectus/proxy statement ("Proxy Statement") for use
in connection with the Xxxxxxxxxx stockholders' meeting to approve
the Company Merger ("Xxxxxxxxxx Stockholders' Meeting"); (c) the
filing of certificates of merger with respect to the Company
Merger and the Michigan Merger with the Ohio Secretary of State
and the Michigan Department of Commerce and the filing of
additional documents with the State of Ohio as described in
Section 1.4(e); (d) the filing of the articles of combination with
the OTS relating to the Bank Merger; (e) any filings, approvals or
no-action letters with or from state securities authorities; and
(f) any anti-trust filings, consents, waivers or approvals.
2.4 Anti-takeover Provisions Inapplicable. To the best
-------------------------------------
knowledge of COFI and Charter One Bank, no "business combination,"
"moratorium," "control share" or other state anti-takeover statute
or regulation (i) applies to the Company Merger, (ii) prohibits or
restricts the ability of COFI, Merger Sub, Charter Michigan or
Charter One Bank to perform its obligations under this Agreement
or its ability to consummate the transactions contemplated hereby,
(iii) would have the effect of invalidating or voiding this
Agreement or any provision hereof, or (iv) would subject
Xxxxxxxxxx or Home Bank to any material impediment or condition in
connection with the exercise of any of its rights under this
Agreement.
2.5 Capitalization.
--------------
(a) As of the date hereof, the authorized capital
stock of COFI consists of (i) 180,000,000 shares of COFI Common
Stock, $0.01 par value per share, of which, as of February 28,
1997, 46,330,703 shares were issued and outstanding and (ii)
20,000,000 shares of preferred stock, $0.01 par value per share,
of which none are issued and outstanding. All of the issued and
outstanding shares of COFI Common Stock have been, and all of the
shares of COFI Common Stock to be issued in the Company Merger
will be, at the Effective Time, duly and validly authorized and
issued, and are or will be, as the case may be, fully paid and
non-assessable. None of the outstanding shares of COFI Common
Stock has been issued in violation of any preemptive rights of the
current or past stockholders of COFI and none of the outstanding
shares of COFI Common Stock is or will be entitled to any
preemptive rights in respect of the Company Merger or any of the
other transactions contemplated by this Agreement.
(b) As of March 31, 1997, COFI does not have
outstanding any securities or rights convertible into or
exchangeable for COFI Common Stock or any commitments, contracts,
understandings or arrangements by which COFI is or may be bound to
issue additional shares of COFI Common Stock, except pursuant to
employee and director stock options or as otherwise set forth in
Section 2.5 of the COFI Disclosure Schedule.
2.6 COFI Financial Statements; Material Changes. COFI
-------------------------------------------
has heretofore delivered to Xxxxxxxxxx its audited consolidated
financial statements for calendar years ended December 31, 1996
and December 31, 1995 (together the "COFI Financial Statements").
The COFI Financial Statements (x) are true and correct in all
material respects; (y) have been prepared in accordance with
generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in
the notes thereto); and (z) fairly present the consolidated
financial position of COFI as of the dates thereof and the
consolidated results of its operations, shareholders' equity, cash
flows and changes in financial position for the periods then
ended. Since December 31, 1996 to the date hereof, COFI and the
COFI Subsidiaries have not undergone or suffered any changes in
their respective condition (financial or otherwise), properties,
business or operations which have been, in any case or in the
aggregate, materially adverse to COFI on a consolidated basis
except as disclosed in Section 2.6 of the COFI Disclosure
Schedule. No facts or circumstances have been discovered from
which it reasonably appears that there is a significant risk and
reasonable probability that COFI will suffer or experience a
Material Adverse Effect.
2.7 COFI Subsidiaries.
-----------------
(a) All of the COFI Subsidiaries as of the date of
this Agreement are listed in Section 2.7 of the COFI Disclosure
Schedule. COFI owns directly or indirectly all of the issued and
outstanding shares of capital stock of the COFI Subsidiaries. No
capital stock of any of the COFI Subsidiaries is, or may become
required to be, issued (other than to COFI or another COFI
Subsidiary) by reason of any options, warrants, scrip, right to
subscribe to, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of any COFI
Subsidiary. All of the shares of capital stock of each COFI
Subsidiary held by COFI or a COFI Subsidiary are fully paid and
non-assessable and are owned free and clear of any claim, lien or
encumbrance, except as disclosed in Section 2.7 of the COFI
Disclosure Schedule.
(b) Each COFI Subsidiary is either a savings bank or
a corporation and is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated or organized, and is duly qualified to do business
and in good standing in each jurisdiction where the character of
the assets or properties owned or leased by it or the nature of
the business transacted by it requires it to be so qualified,
except where the failure to so qualify, either individually or in
the aggregate, would not have a Material Adverse Effect on COFI or
the ability of COFI, Merger Sub, Charter Michigan or Charter One
Bank to consummate the transactions contemplated herein. Each
COFI Subsidiary has the corporate power and authority necessary
for it to own, operate or lease its assets and properties and to
carry on its business as it has been and is now being conducted.
(c) For purposes of this Agreement, an "COFI
Subsidiary" or a "Subsidiary" of COFI shall mean each corporation,
savings bank and other entity in which COFI owns or controls
directly or indirectly 10% or more of the outstanding equity
securities; provided, however, there shall not be included any
such entity acquired in good faith through foreclosure, or any
such entity to the extent that the equity securities of such
entity are owned or controlled in a bona fide fiduciary capacity.
(d) Charter One Bank is a member in good standing of
the Federal Home Loan Bank System. All eligible deposit accounts
issued by Charter One Bank are insured by the Federal Deposit
Insurance Corporation ("FDIC") through the Savings Association
Insurance Fund ("SAIF") to the full extent permitted under
applicable law. Charter One Bank is, and at all times since June
1, 1990 has been, a "domestic building and loan association" as
defined in Section 7701(a)(19) of the Code and a "qualified thrift
lender" as defined in Section 10(m) of HOLA.
2.8 COFI Filings. COFI has previously made available, or
------------
will make available prior to the Effective Time, to Xxxxxxxxxx
true and correct copies of its (i) proxy statements relating to
all meetings of its stockholders (whether special or annual)
during calendar years 1995, 1996, and 1997 and (ii) all other
reports, as amended, or filings, as amended, required to be filed
under the Securities and Exchange Act of 1934, as amended (the
"Securities Exchange Act") by COFI with the SEC since January 1,
1995 including without limitation on Forms 10-K, 10-Q and 8-K.
2.9 COFI Reports. Each of COFI and the COFI Subsidiaries
------------
has filed, and will continue to file, all reports and statements,
together with any amendment required to be made with respect
thereto, that it was, or will be required to file with the SEC,
the FDIC, the OTS, the National Association of Securities Dealers
("NASD") and other applicable thrift, securities and other
regulatory authorities (except filings which are not material).
As of their respective dates (and without giving effect to any
amendments or modifications filed after the date of this Agreement
with respect to reports and documents filed before the date of
this Agreement), each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in
all material respects with all of the statutes, rules and
regulations enforced or promulgated by the authority with which
they were filed and did not contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. Other
than normal examinations conducted by the Internal Revenue
Service, state and local taxing authorities, the OTS or the FDIC
in the regular course of the business of COFI or the COFI
Subsidiaries, no federal, state or local governmental agency,
commission or other entity has initiated any proceeding or, to the
best knowledge of COFI and Charter One Bank, investigation into
the business or operations of COFI or the COFI Subsidiaries within
the past two (2) years except as set forth in Section 2.9 of the
COFI Disclosure Schedule. There is no unresolved violation,
criticism or exception by the SEC, OTS, FDIC or other agency,
commission or entity with respect to any report or statement
referred to herein that is material to COFI or any COFI Subsidiary
on a consolidated basis.
2.10 Compliance with Laws.
--------------------
(a) Except as disclosed in Section 2.10 of the COFI
Disclosure Schedule, the businesses of COFI and the COFI
Subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any governmental entity, including,
without limitation, any laws affecting financial institutions
(including those pertaining to the Bank Secrecy Act, the
investment of funds, the lending of money, the collection of
interest and the extension of credit), federal and state
securities laws, laws and regulations relating to financial
statements and reports, truth-in-lending, truth-in-savings, usury,
fair credit reporting, consumer protection, occupational safety,
fair employment practices, fair labor standards and laws and
regulations relating to employees and employee benefits, and any
statutes or ordinances relating to the properties occupied or used
by COFI or any COFI Subsidiary, except for possible violations
which either singly or in the aggregate do not and, insofar as
reasonably can be foreseen in the future, will not have a Material
Adverse Effect on COFI.
(b) Except as disclosed in Section 2.10 of the COFI
Disclosure Schedule, no investigation or review by any
governmental entity with respect to COFI or any COFI Subsidiary is
pending or, to the best knowledge of COFI and Charter One Bank,
threatened, nor has any governmental entity indicated to COFI or
any COFI Subsidiary an intention to conduct the same, other than
normal thrift regulatory examinations and those the outcome of
which will not have a Material Adverse Effect on COFI.
(c) COFI and each of the COFI Subsidiaries, where
applicable, is in substantial compliance with the applicable
provisions of the Community Reinvestment Act of 1977 and the
regulations promulgated thereunder. As of the date of this
Agreement, neither COFI nor Charter One Bank has been advised of
the existence of any fact or circumstance or set of facts or
circumstances which, if true, would cause COFI or any of the COFI
Subsidiaries to fail to be in substantial compliance with such
provisions. No COFI Subsidiary that is a financial institution has
received a rating from an applicable regulatory authority which is
less than "satisfactory."
2.11 Registration Statement; Proxy Statement. The
----------------------------------------
information to be supplied by COFI for inclusion in the
Registration Statement will not, at the time the Registration
Statement is declared effective and at the Effective Time, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The information to be
supplied by COFI for inclusion in the Proxy Statement will not, on
the date the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to Xxxxxxxxxx'x stockholders,
at the time of the Xxxxxxxxxx Stockholders' Meeting, and at the
Effective Time, contain any statement that, in light of the
circumstances under which it is made, is false or misleading with
respect to any material fact, omits to state any material fact
necessary in order to make the statements made therein not false
or misleading, or omits to state any material fact necessary to
correct any statement in any earlier communication with respect to
the solicitation of proxies for the Xxxxxxxxxx Stockholders'
Meeting that has become false or misleading. If, at any time
prior to the Effective Time, any event relating to COFI or any of
its affiliates, officers, or directors is discovered by COFI that
should be set forth in an amendment to the Registration Statement
or a supplement to the Proxy Statement, COFI will promptly inform
Xxxxxxxxxx and such amendment or supplement will be promptly filed
with the SEC and, as required by law, disseminated to the
stockholders of Xxxxxxxxxx. Notwithstanding the foregoing, COFI
makes no representation or warranty with respect to any
information supplied by Xxxxxxxxxx that is contained in any of the
Registration Statement or the Proxy Statement. The Proxy
Statement and the Registration Statement will (with respect to
COFI) comply in all material respects as to form and substance
with the requirements of the Exchange Act, the Securities Act, and
the rules and regulations thereunder.
2.12 Litigation. Except as disclosed in Section 2.12 of
----------
the COFI Disclosure Schedule, there is no suit, action,
investigation or proceeding, legal, quasi-judicial, administrative
or otherwise, pending or, to the best knowledge of COFI and
Charter One Bank threatened, against or affecting COFI or any COFI
Subsidiary, or any of their respective officers, directors,
employees or agents, in their capacities as such, which if
adversely determined, would have a Material Adverse Effect on COFI
or which would materially affect the ability of COFI, Merger Sub,
Charter Michigan or Charter One Bank to consummate the
transactions contemplated herein or which is seeking to enjoin
consummation of the transactions provided for herein or to obtain
other relief in connection with this Agreement or the transactions
contemplated hereby, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department,
commission agency, instrumentality or arbitrator outstanding
against COFI or any COFI Subsidiary or any of their respective
officers, directors, employees or agents, in their capacities as
such, having, or which, insofar as reasonably can be foreseen in
the future, would have any such effect.
2.13 Licenses. COFI and the COFI Subsidiaries hold all
--------
licenses, certificates, permits, franchises and all patents,
trademarks, service marks, trade names, copyrights or rights
thereto, and required authorizations, approvals, consents,
licenses, clearances and orders or registrations with all
appropriate federal, state or other authorities that are material
to the conduct of their respective businesses as now conducted and
as presently proposed to be conducted.
2.14 Taxes.
-----
(a) Except as disclosed in Section 2.14 of the COFI
Disclosure Schedule, COFI and the COFI Subsidiaries have each
timely filed all tax and information returns required to be filed
and have paid (or COFI has paid on behalf of its Subsidiaries), or
have accrued on their respective books and set up an adequate
reserve for the payment of, all taxes reflected on such returns or
required to be paid in respect of the periods covered by such
returns and have accrued on their respective books and set up an
adequate reserve for the payment of all income and other taxes
anticipated to be payable in respect of periods through the end of
the calendar month next preceding the date hereof. Neither COFI
nor any COFI Subsidiary is delinquent in the payment of any tax,
assessment or governmental charge. No deficiencies for any taxes
have been proposed, asserted or assessed against COFI or any COFI
Subsidiary that have not been resolved or settled, and no requests
for waivers of the time to assess any such tax are pending or have
been agreed to. Except as set forth in Section 2.14 of the COFI
Disclosure Schedule, neither COFI nor any COFI Subsidiary is
currently subject to audit or examination of any of its income tax
returns by the Internal Revenue Service or any state, municipal or
other taxing authority. Neither COFI nor any COFI Subsidiary is a
party to any action or proceeding by any governmental authority
for the assessment or the collection of taxes. Deferred taxes of
COFI and the COFI Subsidiaries have been accounted for in
accordance with generally accepted accounting principles.
(b) COFI has not filed any consolidated federal
income tax return with an "affiliated group" (within the meaning
of Section 1504 of the Code), where COFI was not the common
parent of the group. Neither COFI nor any COFI Subsidiary is, or
has been a party to any tax allocation agreement or arrangement
pursuant to which it has any contingent or outstanding liability
to anyone other than COFI or a COFI Subsidiary.
(c) COFI and the COFI Subsidiaries have each
withheld amounts from its employees, stockholders or holders of
public deposit accounts in compliance with the tax withholding
provisions of applicable federal, state and local laws, have filed
all federal, state and local returns and reports for all periods
for which such returns or reports would be due with respect to
income tax withholding, social security, unemployment taxes,
income and other taxes and all payments or deposits with respect
to such taxes have been timely made and, except as set forth in
Section 2.14 of the COFI Disclosure Schedule have notified all
employees, stockholders, and holders of public deposit accounts of
their obligations to file all forms, statements and reports with
it in accordance with applicable federal, state and local tax laws
and have taken reasonable steps to insure that such employees,
stockholders and holders of public deposit accounts have filed all
such forms, statements and reports with it.
(d) For the purposes of this Agreement, the terms
"tax" and "taxes" include without limitation, any federal, state,
local or foreign income, leasing, franchise, excise, gross
receipts, sales, use, occupational, employment, real property, ad
valorem, tangible and intangible personal property and state
taxes, payments in lieu of taxes, levies, duties, imposts,
business, operations or financial condition, assessments, fees,
charges and withholdings of any nature whatsoever, together with
any related penalties, fines, additions to tax or interest
thereon.
2.15 Insurance. COFI and the COFI Subsidiaries maintain
---------
insurance with insurers which in the best judgment of management
of COFI are sound and reputable on their respective assets and
upon their respective businesses and operations against loss or
damage, risks, hazards and liabilities as in their judgment they
deem appropriate. COFI and the COFI Subsidiaries maintain in
effect all insurance required to be carried by law or by any
agreement by which they are bound. All material claims under all
policies of insurance maintained by COFI and the COFI Subsidiaries
have been filed in due and timely fashion.
2.16 Loans; Investments.
------------------
(a) Except as otherwise disclosed in Section 2.16 of
the COFI Disclosure Schedule, each material loan reflected as an
asset on the COFI Financial Statements dated as of December 31,
1996 is evidenced by appropriate and sufficient documentation and
constitutes, to the best knowledge of COFI and Charter One Bank,
the legal, valid and binding obligation of the obligor named
therein, enforceable in accordance with its terms, except to the
extent that the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principles or doctrines. Except as set forth in
Section 2.16 of the COFI Disclosure Schedule, all such loans are,
and at the Effective Time will be, free and clear of any security
interest, lien, encumbrance or other charge.
(b) All guarantees of indebtedness owed to COFI or any
COFI Subsidiary, including but not limited to those of the Federal
Housing Administration, the Small Business Administration, and
other state and federal agencies, are, to the best knowledge of
COFI and Charter One Bank, valid and enforceable, except to the
extent enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principles or doctrines and except as would not have
a Material Adverse Effect on COFI.
(c) All interest rate swaps, caps, floors and option
agreements and other interest rate risk management arrangements to
which COFI or any COFI Subsidiary is a party or by which any of
their properties or assets may be bound were entered into in the
ordinary course of business and, to the best knowledge of COFI and
Charter One Bank, in accordance with then-customary practice and
applicable rules, regulations and policies of thrift regulatory
authorities and with counterparties believed to be financially
responsible at the time and are legal, valid and binding
obligations and are in full force and effect. COFI and the COFI
Subsidiaries have duly performed in all material respects all of
their respective obligations thereunder to the extent that such
obligations to perform have accrued, and to the best knowledge of
COFI and Charter One Bank, there are no material breaches,
violations or defaults or allegations or assertions of such by any
party thereunder. None of the transactions contemplated by this
Agreement would permit (i) a counterparty under any interest rate
swap, cap, floor and option agreement or any other interest rate
risk management agreement or (ii) any party to any mortgage backed
security financing arrangement, to accelerate, discontinue,
terminate, or otherwise modify any such agreement or arrangement
or would require COFI or any COFI Subsidiary to recognize any gain
or loss with respect to such arrangement.
(d) Except as set forth in Section 2.16 of the COFI
Disclosure Schedule and except for pledges to secure public and
trust deposits, none of the investments reflected in the COFI
Financial Statements dated as of December 31, 1996 under the
heading "Investment Securities," and none of the investments made
by COFI and the COFI Subsidiaries since December 31, 1996, is
subject to any restriction, whether contractual or statutory,
which materially impairs the ability of COFI or any COFI
Subsidiary to freely dispose of such investment at any time, other
than those restrictions imposed on securities held for investment
under generally accepted accounting principles. With respect to
all material repurchase agreements to which COFI or any COFI
Subsidiary is a party, COFI or such Subsidiary has a valid,
perfected first lien, or security interest in the government
securities or other collateral securing each such repurchase
agreement, and the value of the collateral securing each such
repurchase agreement equals or exceeds the amount of the debt
secured by such collateral under such agreement.
2.17 Allowance for Possible Loan Losses. The allowance
----------------------------------
for possible loan losses shown on the COFI Financial Statements as
of December 31, 1996, (and as shown on any financial statements to
be delivered by COFI to Xxxxxxxxxx pursuant to Section 5.7
hereof), to the best knowledge of COFI and Charter One Bank, as of
such date was (and will be as of such subsequent financial
statement dates) adequate in all respects to provide for possible
or specific losses, net of recoveries relating to loans previously
charged off, on loans outstanding, and contained (or will contain)
an additional amount of unallocated reserves for unanticipated
future losses at a level considered adequate under the standards
applied by applicable federal regulatory authorities and based
upon generally accepted accounting principles applicable to
Charter One Bank. To the best knowledge of COFI and Charter One
Bank, the aggregate principal amount of loans contained (or that
will be contained) in the loan portfolio of COFI and the COFI
Subsidiaries as of December 31, 1996 (and as of the dates of any
financial statements to be delivered by COFI to Xxxxxxxxxx
pursuant to Section 5.7 hereof), in excess of such reserve, was
(and will be) fully collectible.
2.18 COFI Benefit Plans.
------------------
(a) The term "COFI Benefit Plans" as used herein
refers to each compensation, consulting, employment, termination
or collective bargaining agreement, and each stock option, stock
purchase, stock appreciation right, life, health, accident or
other insurance, bonus, deferred or incentive compensation,
severance or separation agreement or any agreement providing any
payment or benefit resulting from a change in control, profit
sharing, retirement, or other employee benefit plan, practice,
policy or arrangement of any kind, oral or written, covering any
employee, former employee, director or former director of COFI or
any COFI Subsidiary or his or her beneficiaries, including, but
not limited to, any employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Acts of
1974, as amended ("ERISA"), which COFI or any COFI Subsidiary
maintains, to which COFI or any COFI Subsidiary contributes, or
under which any employee, former employee, director or former
director of COFI or any COFI Subsidiary is covered or has benefit
rights and pursuant to which any liability of COFI or any COFI
Subsidiary exists or is reasonably likely to occur, provided that
the term "Plan or "Plans" is used in this Agreement for
convenience only and does not constitute an acknowledgment that a
particular arrangement is an employee benefit plan within the
meaning of Section 3(3) of ERISA. No COFI Benefit Plan is a
multi-employer plan within the meaning of Section 3(37) of ERISA.
(b) Each of the COFI Benefit Plans that is intended
to be a pension, profit sharing, stock bonus, thrift, savings or
employee stock ownership plan that is qualified under Section
401(a) of the Code ("COFI Qualified Plans") has been determined by
the Internal Revenue Service to qualify under Section 401(a) of
the Code, or an application for determination of such
qualification has been timely made to the Internal Revenue Service
prior to the end of the applicable remedial amendment period under
Section 401(b) of the Code, and, to the best of COFI's knowledge,
there exist no circumstances likely to adversely affect the
qualified status of any such COFI Qualified Plan. All such COFI
Qualified Plans established or maintained by COFI or any of the
COFI Subsidiaries or to which COFI or any of the COFI Subsidiaries
contribute are in compliance in all material respects with all
applicable requirements of ERISA, and are in compliance in all
material respects with all applicable requirements (including
qualification and non-discrimination requirements) of the Code for
obtaining the tax benefits the Code thereupon permits with respect
to such COFI Qualified Plans. Neither COFI nor any COFI
Subsidiary maintains, sponsors or contributes to a Qualified Plan
that is a defined benefit pension plan subject to Title IV of
ERISA. All accrued contributions and other payments required to
be made by COFI or any COFI Subsidiary to any COFI Benefit Plan
through December 31, 1996, have been made or reserves adequate for
such purposes as of December 31, 1996 have been set aside therefor
and reflected in the COFI Financial Statements dated as of
December 31, 1996. Neither COFI nor any COFI Subsidiary is in
material default in performing any of its respective contractual
obligations under any of the COFI Benefit Plans or any related
trust agreement or insurance contract, and there are no material
outstanding liabilities of any such Plan other than liabilities
for benefits to be paid to participants in such Plan and their
beneficiaries in accordance with the terms of such Plan.
(c) There is no pending or, to the best knowledge of
COFI and Charter One Bank, threatened litigation or pending claim
(other than benefit claims made in the ordinary course) by or on
behalf of or against any of the COFI Benefit Plans (or with
respect to the administration of any of such Plans) now or
heretofore maintained by COFI or any COFI Subsidiary which allege
violations of applicable state or federal law which are reasonably
likely to result in a liability on the part of COFI or any COFI
Subsidiary or any such Plan.
(d) COFI and the COFI Subsidiaries and all other
persons having fiduciary or other responsibilities or duties with
respect to any COFI Benefit Plan are and have since the inception
of each such Plan been in substantial compliance with, and each
such Plan is and has been operated in substantial accordance with,
its provisions and in substantial compliance with the applicable
laws, rules and regulations governing such Plan, including,
without limitation, the rules and regulations promulgated by the
Department of Labor, the Pension Benefit Guaranty Corporation
("PBGC") and the Internal Revenue Service under ERISA, the Code or
any other applicable law. Notwithstanding the foregoing, no
representation is made with respect to compliance by a third party
insurance company. No "reportable event" (as defined in Section
4043(b) of ERISA) has occurred with respect to any COFI Qualified
Plan. Neither COFI, any COFI Subsidiary nor any COFI Benefit Plan
has incurred or is reasonably likely to incur any liability for
any "prohibited transactions" (as defined in Section 406 of ERISA
or Section 4975(a) of the Code), or any material liability under
Section 601 of ERISA or Section 4980 of the Code.
(e) COFI and the COFI Subsidiaries have filed or
caused to be filed, and will continue to file or cause to be
filed, in a timely manner all filings pertaining to each COFI
Benefit Plan with the Internal Revenue Service, the PBGC, the
Department of Labor, and as prescribed by the Code or ERISA, or
regulations issued thereunder. All such filings, as amended, were
complete and accurate in all material respects as of the dates of
such filings, and there were no misstatements or omissions in any
such filing which would be material to the financial condition of
COFI on a consolidated basis. Notwithstanding the foregoing, no
representation is made with respect to filings by a third party
insurance company.
2.19 Compliance With Environmental Laws.
----------------------------------
(a) Except as set forth in Section 2.19 of the COFI
Disclosure Schedule: (i) to the best knowledge of COFI and
Charter One Bank, the operations of COFI and each of the COFI
Subsidiaries comply in all material respects with all applicable
past and present Environmental Laws (as defined below); (ii) to
the best knowledge of COFI and Charter One Bank, none of the
operations of COFI or any COFI Subsidiary, no assets presently or
formerly owned or leased by COFI or any COFI Subsidiary and no
Mortgaged Premises or a Participating Facility (as defined below)
are subject to any judicial or administrative proceedings alleging
the violation of any past or present Environmental Law, nor are
they the subject of any claims alleging damages to health or
property, pursuant to which COFI, any COFI Subsidiary or any owner
of a Mortgaged Premises or a Participating Facility would be
liable in law or equity; (iii) none of the operations of COFI or
any COFI Subsidiary, no assets presently owned or, to the best
knowledge of COFI and Charter One Bank, formerly owned by COFI or
any COFI Subsidiary, and, to the best knowledge of COFI and
Charter One Bank, no Mortgaged Premises or Participating Facility
are the subject of any federal, state or local investigation
evaluating whether any remedial action is needed to respond to a
release or threatened release of any Hazardous Substance (as
defined below), or any other substance into the environment, nor
has COFI or any COFI Subsidiary, or, to the best knowledge of COFI
and Charter One Bank, any owner of a Mortgaged Premises or
Participating Facility been directed to conduct such
investigation, formally or informally, by any governmental agency,
nor have any of them agreed with any governmental agency or
private person to conduct any such investigation; and (iv) neither
COFI or any COFI Subsidiary, nor, to the best knowledge of COFI
and Charter One Bank, any owner of a Mortgaged Premises or a
Participating Facility has filed any notice under any
Environmental Law indicating past or present treatment, storage or
disposal of a Hazardous Substance or reporting a spill or release
of a Hazardous Substance, or any other substance into the
environment.
(b) For purposes of this Section, "Mortgaged
Premises" shall mean each (i) real property interest (including
without limitation any fee or leasehold interest) which is
encumbered or affected by any mortgage, deed of trust, deed to
secure debt or other similar document or instrument granting to
any party hereto or any of its Subsidiaries a lien on or security
interest in such real property interest and (ii) any other real
property interest upon which is situated assets or other property
affected or encumbered by any document or instrument granting to
any party hereto or any of its Subsidiaries a lien thereon or
security interest therein; provided, however, that the term
"Mortgaged Premises" shall not include one- to four-unit, single-
family residences, and in the case of COFI and the COFI
Subsidiaries, any real property interest securing a loan with a
principal balance of less than one million dollars. For purposes
of this Section, "Participating Facility" means any property in
which any party hereto or any of its Subsidiaries participates in
the management of such property and, where the context requires,
includes the owner or operator of such property. For purposes of
this Agreement, "Hazardous Substance" has the meaning set forth in
Section 9601 of the Comprehensive Environmental Response
Compensation and Liability Act of 1980, 42 U.S.C.A., Section 9601
et seq., and also includes any substance now or hereafter
regulated by or subject to any Environmental Laws (as defined
below) and any other pollutant, contaminant, or waste, including
without limitation, petroleum, asbestos, fiberglass, radon, and
polychlorinated biphenyls. For purposes of this Agreement,
"Environmental Laws" means all laws (civil or common), ordinances,
rules, regulations, guidelines, and orders that: (i) regulate
air, water, soil, and solid waste management, including the
generation, release, containment, storage, handling,
transportation, disposition, or management of any Hazardous
Substance; (ii) regulate or prescribe requirements for air, water,
or soil quality; (iii) are intended to protect public health or
the environment; or (iv) establish liability for the
investigation, removal, or cleanup of, or damage caused by, any
Hazardous Substance.
2.20 Contracts and Commitments. Section 2.20 of the COFI
-------------------------
Disclosure Schedule contains, and shall be supplemented by COFI
and Charter One Bank, as required by Section 5.10 hereof, so as to
contain at the Closing Date copies of each of the following
documents, certified by an officer of COFI to be true and correct
copies of such documents on the dates of such certificates.
(a) The Certificate or Articles of Incorporation,
Charters and Bylaws of COFI and each COFI Subsidiary.
(b) All judgments, orders, injunctions, court
decrees or settlement agreements arising out of or relating to the
labor and employment practices or decisions of COFI or any COFI
Subsidiary which, by their terms, continue to bind or affect COFI
or any COFI Subsidiary.
(c) All orders, decrees, memorandums, agreements or
understandings with regulatory agencies binding upon or affecting
the current operations of COFI or any COFI Subsidiary or any of
their directors or officers in their capacities as such.
2.21 Defaults. There has not been any default in any
--------
material obligation to be performed by COFI or any COFI Subsidiary
under any material contract or commitment, and neither COFI nor
any COFI Subsidiary has waived, any material right under any
material contract or commitment. To the best knowledge of COFI
and Charter One Bank, no other party to any material contract or
commitment is in default in any material obligation to be
performed by such party.
2.22 Operations Since December 31, 1996. Between
----------------------------------
December 31, 1996 and the date hereof, except as set forth in
Section 2.22 of the COFI Disclosure Schedule, there has not been:
(a) any creation or assumption of indebtedness
(including the extension or renewal of any existing indebtedness,
or the increase thereof) by COFI or any COFI Subsidiary for
borrowed money, or otherwise, other than in the ordinary course of
business, none of which is in default;
(b) any change in COFI's independent auditors,
historic methods of accounting (other than as required by
generally accepted accounting principles or regulatory accounting
principles), or in its system for maintaining its equipment and
real estate; or
(c) any event or condition of any character (other
than changes in legal, economic or other conditions which are not
specially or uniquely applicable to COFI or any COFI Subsidiary)
materially adversely affecting the business, operations or
financial condition of COFI on a consolidated basis.
2.23 Undisclosed Liabilities. All of the obligations or
-----------------------
liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise, whether due or to become due, and regardless of when
asserted) arising out of transactions or events heretofore entered
into, or any action or inaction, including taxes with respect to
or based upon transactions or events heretofore occurring, that
are required to be reflected, disclosed or reserved against in
audited consolidated financial statements in accordance with
generally accepted accounting principles ("Liabilities") have, in
the case of COFI and the COFI Subsidiaries, been so reflected,
disclosed or reserved against in the COFI Financial Statements
dated as of December 31, 1996 or in the notes thereto, and COFI
and the COFI Subsidiaries have no other Liabilities except (a)
Liabilities incurred since December 31, 1996 in the ordinary
course of business or (b) as disclosed in Section 2.23 of the COFI
Disclosure Schedule.
2.24 Assets.
------
(a) COFI and the COFI Subsidiaries have good, and
marketable title to their real properties, including any
leaseholds and ground leases, and their other assets and
properties, all as reflected as owned or held by COFI or any COFI
Subsidiary in the COFI Financial Statements dated as of December
31, 1996, and those acquired since such date, except for (i)
assets and properties disposed of since such date in the ordinary
course of business and (ii) liens, none of which, in the
aggregate, except as set forth in the COFI Financial Statements
dated as of December 31, 1996 or in Section 2.24 of the COFI
Disclosure Schedule, are material to the assets of COFI on a
consolidated basis. All buildings, structures, fixtures and
appurtenances comprising part of the real properties of COFI and
the COFI Subsidiaries (whether owned or leased) are in good
operating condition and have been well maintained, reasonable wear
and tear excepted. Title to all real property owned by COFI and
the COFI Subsidiaries is held in fee simple, except as otherwise
noted in the COFI Financial Statements as of December 31, 1996 or
as set forth in Section 2.24 of the COFI Disclosure Schedule.
COFI and the COFI Subsidiaries have title or other rights to its
assets sufficient in all material respects for the conduct of
their respective businesses as presently conducted, and except as
set forth in the COFI Financial Statements dated as of December
31, 1996, or in Section 2.24 of the COFI Disclosure Schedule, such
assets are free, clear and discharged of and from any and all
liens, charges, encumbrances, security interests and/or equities
which are material to COFI or any COFI Subsidiary.
(b) All leases pursuant to which COFI or any COFI
Subsidiary, as lessee, leases real or personal property which are
material to the business of COFI on a consolidated basis are, to
the best knowledge of COFI and Charter One Bank, valid, effective,
and enforceable against the lessor in accordance with their
respective terms. There is not under any of such leases any
existing default, or any event which, with notice or lapse of time
or both, would constitute a default, with respect to COFI or any
COFI Subsidiary, or to the best knowledge of COFI and Charter One
Bank, the other party.
2.25 Indemnification. To the best knowledge of COFI and
---------------
Charter One Bank, except as set forth in Section 2.25 of the COFI
Disclosure Schedule, no action or failure to take action by any
director, officer, employee or agent of COFI or any COFI
Subsidiary has occurred which would give rise to a claim by any
such person for indemnification from COFI or any COFI Subsidiary
under the corporate indemnification provisions of such entity in
effect on the date of this Agreement.
2.26 Insider Interests. All outstanding loans and other
-----------------
contractual arrangements (including deposit relationships) between
COFI or any COFI Subsidiary and any of its officers, directors or
employees conform to applicable rules and regulations and
requirements of all applicable regulatory agencies which were in
effect when such loans and other contractual arrangements were
entered into. Except as set forth in Section 2.26 of the COFI
Disclosure Schedule, no officer, director or employee of COFI or
any COFI Subsidiary has any material interest in any property,
real or personal, tangible or intangible, used in or pertaining to
the business of COFI or any COFI Subsidiary.
2.27 Brokers and Finders. Neither COFI nor any COFI
-------------------
Subsidiary nor any of their respective officers, directors or
employees has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees,
commissions or finders' fees, and no broker or finder has acted
directly or indirectly for COFI or any COFI Subsidiary, in
connection with this Agreement or the transactions contemplated
hereby.
2.28 Accuracy of Information. The statements of COFI and
-----------------------
Charter One Bank contained in this Agreement, the Schedules hereto
and in any other written document executed and delivered by or on
behalf of COFI or Charter One Bank pursuant to the terms of this
Agreement are true and correct in all material respects.
2.29 Governmental Approvals and Other Conditions. To the
-------------------------------------------
best knowledge of COFI and Charter One Bank, there is no reason
relating specifically to COFI or any COFI Subsidiary why (a) the
approvals that are required to be obtained from regulatory
authorities having approval authority in connection with the
transactions contemplated hereby should not be granted, (b) such
regulatory approvals should be subject to a condition which would
differ from conditions customarily imposed by such regulatory
authorities in orders approving acquisitions of the type
contemplated hereby or (c) any of the conditions precedent as
specified in Article VI hereof to the obligations of any of the
parties hereto to consummate the transactions contemplated hereby
are unlikely to be fulfilled within the applicable time period or
periods required for satisfaction of such condition or conditions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXXXXXX AND HOME BANK
Xxxxxxxxxx and Home Bank jointly and severally represent and
warrant to COFI and Charter One Bank that:
3.1 Organization. Xxxxxxxxxx is a corporation duly
------------
organized, validly existing and in good standing under the laws of
the State of Ohio and has all requisite power and authority,
corporate and otherwise, to own, operate and lease its assets and
properties and to carry on its business substantially as it has
been and is now being conducted. Xxxxxxxxxx is duly qualified to
do business and is in good standing in each jurisdiction where the
character of the assets or properties owned or leased by it or the
nature of the business transacted by it requires that it be so
qualified, except where the failure to so qualify would not have a
Material Adverse Effect on Xxxxxxxxxx or its ability to consummate
the transactions contemplated herein. Xxxxxxxxxx has all
requisite corporate power and authority to enter into this
Agreement and, subject to the approval of this Agreement and the
Company Merger by its stockholders and the receipt of all
requisite regulatory approvals and the expiration of any
applicable waiting periods, to consummate the transactions
contemplated hereby. Xxxxxxxxxx is duly registered as a savings
and loan holding company under HOLA.
3.2 Authorization. The execution, delivery and
-------------
performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved and
authorized by the Boards of Directors of Xxxxxxxxxx and Home Bank,
and all necessary corporate action on the part of Xxxxxxxxxx and
Home Bank has been taken, subject to the approval of this
Agreement and the Company Merger by the holders of 2/3 of the
issued and outstanding Xxxxxxxxxx Common Stock ("Required Vote").
This Agreement has been duly executed and delivered by Xxxxxxxxxx
and Home Bank and constitutes the valid and binding obligation of
each of them and is enforceable against each of them, except to
the extent that enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles or doctrines.
3.3 Conflicts. Subject to the second sentence of this
---------
Section 3.3, the execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby
will not, conflict with or result in any violation, breach or
termination of, or default or loss of a material benefit under, or
permit the acceleration of any obligation under, or result in the
creation of any material lien, charge or encumbrance on any
property or assets under, any provision of the Articles of
Incorporation or Code of Regulations of Xxxxxxxxxx or similar
documents of any Xxxxxxxxxx Subsidiary (as defined in Section 3.7
hereof), or any mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary
or their respective properties, other than any such conflicts,
violations or defaults which (i) will be cured or waived prior to
the Effective Time or (ii) are disclosed in Section 3.3 of that
certain confidential writing delivered by Xxxxxxxxxx to COFI
within two business days prior to the date hereof (the "Xxxxxxxxxx
Disclosure Schedule"). No consent, approval, order or
authorization of, or registration, declaration or filing with, any
federal or state governmental authority is required by or with
respect to Xxxxxxxxxx or Home Bank in connection with the
execution and delivery of this Agreement or the consummation by
Xxxxxxxxxx or Home Bank of the transactions contemplated hereby
except for the filings, approvals or waivers contemplated by
Section 2.3 hereof.
3.4 Anti-takeover Provisions Inapplicable. To the best
-------------------------------------
knowledge of Xxxxxxxxxx and Home Bank, no "business combination,"
"moratorium," "control share" or other state anti-takeover statute
or regulation, (i) applies to the Company Merger or to the Voting
Agreements, (ii) prohibits or restricts the ability of Xxxxxxxxxx
or Home Bank to perform its obligations under this Agreement, or
the ability of Xxxxxxxxxx to consummate the Company Merger or the
ability of Home Bank to consummate the Bank Merger, (iii) would
have the effect of invalidating or voiding this Agreement, any of
the Voting Agreements, or any provision hereof or thereof, or (iv)
would subject COFI, Charter Michigan or Charter One Bank to any
material impediment or condition in connection with the exercise
of any of its right under this Agreement with respect to the
Company Merger or any of the Voting Agreements.
3.5 Capitalization and Stockholders.
-------------------------------
(a) As of the date hereof, the authorized capital
stock of Xxxxxxxxxx consists of (i) 5,000,000 shares of Xxxxxxxxxx
Common Stock, $0.01 par value, of which 1,915,892 shares are
issued and outstanding and 9,543 shares are held as treasury
shares and (ii) 1,000,000 shares of preferred stock, of which none
are issued and outstanding. All of the issued and outstanding
shares of Xxxxxxxxxx Common Stock have been duly and validly
authorized and issued, and are fully paid and non-assessable.
None of the outstanding shares of Xxxxxxxxxx Common Stock has been
issued in violation of any preemptive rights of current or past
stockholders or are subject to any preemptive rights of the
current or past stockholders of Xxxxxxxxxx. All of the issued and
outstanding shares of Xxxxxxxxxx Common Stock will be entitled to
vote to approve this Agreement and the Company Merger.
(b) As of the date hereof, Xxxxxxxxxx had 189,127.6
shares of Xxxxxxxxxx Common Stock reserved for issuance under the
1985 Option Plan and 1995 Option Plan for the benefit of employees
and directors of Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries,
pursuant to which options covering 82,845.6 shares of Xxxxxxxxxx
Common Stock are outstanding (the "Xxxxxxxxxx Stock Options").
Except as set forth in this Section, there are no shares of
capital stock or other equity securities of Xxxxxxxxxx outstanding
and no outstanding options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for,
shares of the capital stock of Xxxxxxxxxx, or contracts,
commitments, understandings, or arrangements by which Xxxxxxxxxx
is or may be bound to issue additional shares of its capital stock
or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock. Section 3.5 of the
Xxxxxxxxxx Disclosure Schedule sets forth the name of the holder
of each Xxxxxxxxxx Stock Option and the date of grant of, number
of shares represented by exercise price and expiration of, each
Xxxxxxxxxx Stock Option.
3.6 Xxxxxxxxxx Financial Statements; Material Changes.
--------------------------------------------------
Xxxxxxxxxx has heretofore delivered to COFI its audited
consolidated financial statements for calendar years ended
December 31, 1996 and December 31, 1995 (together the "Xxxxxxxxxx
Financial Statements"). The Xxxxxxxxxx Financial Statements (x)
are true and correct in all material respects; (y) have been
prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto); and
(z) fairly present the consolidated financial position of
Xxxxxxxxxx as of the dates thereof and the consolidated results of
its operations, stockholders' equity, cash flows and changes in
financial position for the periods then ended. Since December
31, 1996 to the date hereof, Xxxxxxxxxx and the Xxxxxxxxxx
Subsidiaries have not undergone or suffered any changes in their
respective condition (financial or otherwise), properties,
business or operations which have been, in any case or in the
aggregate, materially adverse to Xxxxxxxxxx on a consolidated
basis except as disclosed in Section 3.6 of the Xxxxxxxxxx
Disclosure Schedule. No facts or circumstances have been
discovered from which it reasonably appears that there is a
significant risk and reasonable probability that Xxxxxxxxxx will
suffer or experience a Material Adverse Effect.
3.7 Xxxxxxxxxx Subsidiaries.
-----------------------
(a) All of the Xxxxxxxxxx Subsidiaries are listed in
Section 3.7 of the Xxxxxxxxxx Disclosure Schedule. Except as set
forth in Section 3.7 of the Xxxxxxxxxx Disclosure Schedule,
Xxxxxxxxxx owns directly or indirectly all of the issued and
outstanding shares of capital stock of the Xxxxxxxxxx
Subsidiaries. Section 3.7 of the Xxxxxxxxxx Disclosure Schedule
sets forth the number of shares of authorized and outstanding
capital stock of the Xxxxxxxxxx Subsidiaries. Except for equity
securities of the Federal Home Loan Bank of Cincinnati or as set
forth in Section 3.7 of the Xxxxxxxxxx Disclosure Schedule,
neither Xxxxxxxxxx nor the Xxxxxxxxxx Subsidiaries own directly or
indirectly any debt or equity securities, or other proprietary
interest in any other corporation, limited liability company,
joint venture, partnership, entity, association or other business.
No capital stock of any of the Xxxxxxxxxx Subsidiaries is or may
become required to be issued (other than to Xxxxxxxxxx) by reason
of any options, warrants, scrip, rights to subscribe to, calls, or
commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the
capital stock of any Xxxxxxxxxx Subsidiary. Other than as set
forth in Section 3.7 of the Xxxxxxxxxx Disclosure Schedule there
are no contracts, commitments, understandings or arrangements
relating to the rights of Xxxxxxxxxx to vote or to dispose of
shares of the capital stock of any Xxxxxxxxxx Subsidiary. All of
the shares of capital stock of each Xxxxxxxxxx Subsidiary are
fully paid and non-assessable and are owned by Xxxxxxxxxx or
another Xxxxxxxxxx Subsidiary free and clear of any claim, lien or
encumbrance, except as disclosed in Section 3.7 of the Xxxxxxxxxx
Disclosure Schedule.
(b) Each Xxxxxxxxxx Subsidiary is either a savings
bank or a corporation and is duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is
incorporated or organized, and is duly qualified to do business
and in good standing in each jurisdiction where the character of
the assets or properties owned or leased by it or the nature of
the business transacted by it requires it to be so qualified,
except where the failure to so qualify, either individually or in
the aggregate, would not have a Material Adverse Effect on
Xxxxxxxxxx or the ability of Xxxxxxxxxx or Home Bank to consummate
the transactions contemplated herein. Each Xxxxxxxxxx Subsidiary
has the corporate power and authority necessary for it to own,
operate or lease its assets and properties and to carry on its
business substantially as it has been and is now being conducted.
(c) For purposes of this Agreement, an "Xxxxxxxxxx
Subsidiary" or a "Subsidiary" of Xxxxxxxxxx shall mean each
corporation, savings bank, and other entity in which Xxxxxxxxxx
owns or controls directly or indirectly 10% or more of the
outstanding equity securities; provided, however, there shall not
be included any such entity acquired in good faith through
foreclosure, or any such entity to the extent that the equity
securities of such entity are owned or controlled in a bona fide
fiduciary capacity.
(d) Home Bank is a member in good standing of the
Federal Home Loan Bank System. All eligible deposit accounts
issued by Home Bank are insured by the FDIC through the SAIF to
the full extent permitted under applicable law. Home Bank is, and
at all times since June 1, 1990 has been, a "domestic building and
loan association" as defined in Section 7701(a)(19) of the Code
and a "qualified thrift lender" as defined in Section 10(m) of
HOLA. The liquidation account established by Home Bank in
connection with its conversion from mutual to stock form has been
maintained since its establishment in accordance with applicable
laws.
3.8 Xxxxxxxxxx Filings. Xxxxxxxxxx has previously made
------------------
available, or will make available prior to the Effective Time, to
COFI true and correct copies of the (i) proxy statements relating
to all meetings of stockholders (whether special or annual) of
Xxxxxxxxxx during calendar years 1995, 1996 and 1997 and (ii) all
other reports, as amended, or filings, as amended, required to be
filed under the Securities Exchange Act by Xxxxxxxxxx with the SEC
since January 1, 1995 including without limitation on Forms 10-K,
10-Q and 8-K.
3.9 Xxxxxxxxxx Reports. Each of Xxxxxxxxxx and the
------------------
Xxxxxxxxxx Subsidiaries has filed, and will continue to file, all
reports and statements, together with any amendment required to be
made with respect thereto, that it has, or will be, required to
file with the SEC, the FDIC, the OTS, the NASD, and other
applicable thrift, securities and other regulatory authorities
(except filings which are not material). As of their respective
dates (and without giving effect to any amendments or
modifications filed after the date of this Agreement with respect
to reports and documents filed before the date of this Agreement),
each of such reports and documents, including the financial
statements, exhibits, and schedules thereto, complied in all
material respects with all of the statutes, rules and regulations
enforced or promulgated by the authority with which they were
filed and did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which
they were made, not misleading. Other than normal examinations
conducted by the Internal Revenue Service, state and local taxing
authorities, the OTS or the FDIC in the regular course of the
business of Xxxxxxxxxx or the Xxxxxxxxxx Subsidiaries, no federal,
state or local governmental agency, commission or other entity has
initiated any proceeding or, to the best knowledge of Xxxxxxxxxx
and Home Bank, investigation into the business or operations of
Xxxxxxxxxx or the Xxxxxxxxxx Subsidiaries within the past two (2)
years except as set forth in Section 3.9 of the Xxxxxxxxxx
Disclosure Schedule. There is no unresolved violation, criticism
or exception by the SEC, OTS, FDIC or other agency, commission or
entity with respect to any report or statement referred to herein
that is material to Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary.
3.10 Compliance With Laws.
--------------------
(a) Except as disclosed in Section 3.10 of the
Xxxxxxxxxx Disclosure Schedule, and for violations which are not
material to Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, the
businesses of Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries are being
conducted, in all material respects, in compliance with all laws,
ordinances or regulations of governmental authorities, including
without limitation, laws affecting financial institutions
(including those pertaining to the Bank Secrecy Act, the
investment of funds, the lending of money, the collection of
interest and the extension of credit), federal and state
securities laws, laws and regulations relating to financial
statements and reports, truth-in-lending, truth-in-savings, usury,
fair credit reporting, consumer protection, occupational safety,
fair employment practices, fair labor standards and all other laws
and regulations relating to employees and employee benefits, and
any statutes or ordinances relating to the properties occupied or
used by Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary.
(b) Except as disclosed in Section 3.10 of the
Xxxxxxxxxx Disclosure Schedule, no investigation or review by any
governmental entity with respect to Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary is pending or, to the best knowledge of Xxxxxxxxxx and
Home Bank, threatened, nor has any governmental entity indicated
to Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary an intention to conduct
the same, other than normal thrift regulatory examinations.
(c) Xxxxxxxxxx and each of the Xxxxxxxxxx
Subsidiaries, where applicable, is in substantial compliance with
the applicable provisions of the Community Reinvestment Act of
1977 and the regulations promulgated thereunder. As of the date
of this Agreement, neither Xxxxxxxxxx nor Home Bank has been
advised of the existence of any fact or circumstance or set of
facts or circumstances which, if true, would cause Xxxxxxxxxx or
any of the Xxxxxxxxxx Subsidiaries to fail to be in substantial
compliance with such provisions. Home Bank has not received since
December 31, 1993 a rating from an applicable regulatory authority
which is less than "satisfactory."
3.11 Registration Statement: Proxy Statement. The
---------------------------------------
information to be supplied by Xxxxxxxxxx for inclusion in the
Registration Statement will not, at the time the Registration
Statement is declared effective and at the Effective Time, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The information to be
supplied by Xxxxxxxxxx for inclusion in the Proxy Statement will
not, on the date of the Proxy Statement (or any amendment thereof
or supplement thereto) is first mailed to Xxxxxxxxxx'x
stockholders, at the time of the Xxxxxxxxxx Stockholders' Meeting,
and at the Effective Time, contain any statement that, in light of
the circumstances under which it is made, is false or misleading
with respect to any material fact, omits to state any material
fact necessary in order to make the statements made therein not
false or misleading, or omits to state any material fact necessary
to correct any statement in any earlier communication with respect
to the solicitation of proxies for the Xxxxxxxxxx Stockholders'
Meeting that has become false or misleading. If at any time prior
to the Effective Time, any event relating to Xxxxxxxxxx or any of
its affiliates, officers or directors is discovered by Xxxxxxxxxx
that should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, Xxxxxxxxxx will
promptly inform COFI, and such amendment or supplement will be
promptly filed with the SEC and, as required by law, disseminated
to the stockholders of Xxxxxxxxxx. Notwithstanding the foregoing,
Xxxxxxxxxx makes no representation or warranty with respect to any
information supplied by COFI that is contained in the Registration
Statement or the Proxy Statement. The Proxy Statement will (with
respect to Xxxxxxxxxx) comply in all material respects as to form
and substance with the requirements of the Exchange Act and the
rules and regulations thereunder.
3.12 Litigation. Except as disclosed in Section 3.12 of
----------
the Xxxxxxxxxx Disclosure Schedule, there is no suit, action,
investigation or proceeding, legal, quasi-judicial, administrative
or otherwise, pending or, to the best knowledge of Xxxxxxxxxx and
Home Bank threatened, against or affecting Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary, or any of their respective officers,
directors, employees or agents, in their capacities as such, which
is seeking equitable relief or damages against Xxxxxxxxxx, any
Xxxxxxxxxx Subsidiary, or any of their respective officers,
directors, employees or agents, in their capacities as such, in
excess of $10,000, or which would materially affect the ability of
Xxxxxxxxxx or Home Bank to consummate the transactions
contemplated herein or which is seeking to enjoin consummation of
the transactions provided for herein or to obtain other relief in
connection with this Agreement or the transactions contemplated
hereby, nor is there any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against Xxxxxxxxxx or
any Xxxxxxxxxx Subsidiary or any of their respective officers,
directors, employees or agents, in their capacities as such,
having, or which, insofar as reasonably can be foreseen in the
future, would have any such effect.
3.13 Licenses. Xxxxxxxxxx and the Xxxxxxxxxx
--------
Subsidiaries hold all licenses, certificates, permits, franchises
and all patents, trademarks, service marks, trade names,
copyrights or right thereto, and required authorizations,
approvals, consents, licenses, clearances and orders or
registrations with all appropriate federal, state or other
authorities that are material to the conduct of their respective
businesses as now conducted and as presently proposed to be
conducted.
3.14 Taxes.
-----
(a) Except as disclosed in Section 3.14 of the
Xxxxxxxxxx Disclosure Schedule, Xxxxxxxxxx and the Xxxxxxxxxx
Subsidiaries have each timely filed all tax and information
returns required to be filed and have paid (or Xxxxxxxxxx has paid
on behalf of its Subsidiaries), or have accrued on their
respective books and set up an adequate reserve for the payment
of, all taxes reflected on such returns as required to be paid in
respect of the periods covered by such returns and have accrued on
their respective books and set up an adequate reserve for the
payment of all income and other taxes anticipated to be payable in
respect of periods through the end of the calendar month next
preceding the date hereof. Neither Xxxxxxxxxx nor any Xxxxxxxxxx
Subsidiary is delinquent in the payment of any tax, assessment or
governmental charge. No deficiencies for any taxes have been
proposed, asserted or assessed against Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary that have not been resolved or settled and
no requests for waivers of the time to assess any such tax are
pending or have been agreed to. The income tax returns of
Xxxxxxxxxx and Xxxxxxxxxx Subsidiaries have not been audited by
the Internal Revenue Service, state, municipal or other taxing
authority after the 1991 tax year. Neither Xxxxxxxxxx nor any
Xxxxxxxxxx Subsidiary is a party to any action or proceeding by
any governmental authority for the assessment or the collection of
taxes. Deferred taxes of Xxxxxxxxxx and the Xxxxxxxxxx
Subsidiaries have been accounted for in accordance with generally
accepted accounting principles.
(b) Xxxxxxxxxx has not filed any consolidated
federal income tax return with an "affiliated group" (within the
meaning of Section 1504 of the Code) where Xxxxxxxxxx was not the
common parent of the group. Neither Xxxxxxxxxx nor any Xxxxxxxxxx
Subsidiary is, or has been, a party to any tax allocation
agreement or arrangement pursuant to which it has any contingent
or outstanding liability to anyone other than Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary. Neither Xxxxxxxxxx nor any Xxxxxxxxxx
Subsidiary is required to include in income any adjustment
pursuant to Section 481(a) of the Code and no such adjustment has
been proposed by the Internal Revenue Service. Neither Xxxxxxxxxx
nor any Xxxxxxxxxx Subsidiary has filed a consent pursuant to
Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
(c) Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries have
each withheld amounts from its employees, stockholders, or holders
of public deposit accounts in compliance with the tax withholding
provisions of applicable federal, state and local laws, have filed
all federal, state and local returns and reports for all periods
for which such returns or reports would be due with respect to
income tax withholding, social security, unemployment taxes,
income and other taxes and all payments or deposits with respect
to such taxes have been timely made and except as set forth in
Section 3.14 of the Xxxxxxxxxx Disclosure Schedule, have notified
all employees, stockholders and holders of public deposit accounts
of their obligations to file all forms, statements or reports with
it in accordance with applicable federal, state and local tax laws
and have taken reasonable steps to insure that such employees,
stockholders and holders of public deposit accounts have filed all
such forms statements and reports with it.
3.15 Insurance. Xxxxxxxxxx and the Xxxxxxxxxx
---------
Subsidiaries maintain insurance with insurers which in the best
judgment of management of Xxxxxxxxxx are sound and reputable on
their respective assets and upon their respective businesses and
operations against loss or damage, risks, hazards and liabilities
as in their judgment they deem appropriate. Xxxxxxxxxx and the
Xxxxxxxxxx Subsidiaries maintain in effect all insurance required
to be carried by law or by any agreement by which they are bound.
All material claims under all policies of insurance maintained by
Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries have been filed in due
and timely fashion. Each of Xxxxxxxxxx and the Xxxxxxxxxx
Subsidiaries has taken or will timely take all requisite action
(including without limitation the making of claims and the giving
of notices) pursuant to its directors' and officers' liability
insurance policy or policies in order to preserve all rights
thereunder with respect to all matters (other than matters arising
in connection with this Agreement and the transactions
contemplated hereby) occurring prior to the Effective Time.
Neither Xxxxxxxxxx nor any of the Xxxxxxxxxx Subsidiaries has,
during the past three years, had an insurance policy canceled or
been denied insurance coverage for which any of such companies has
applied.
3.16 Loans; Investments.
------------------
(a) Except as otherwise disclosed in Section 3.16 of
the Xxxxxxxxxx Disclosure Schedule, each loan reflected as an
asset on the Xxxxxxxxxx Financial Statement dated as of December
31, 1996, is evidenced by appropriate and sufficient documentation
and constitutes, to the best knowledge of Xxxxxxxxxx and Home
Bank, the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms, except to
the extent that the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principles or doctrines. Except as set forth in
Section 3.16 of the Xxxxxxxxxx Disclosure Schedule, all such loans
are, and at the Effective Time will be, free and clear of any
security interest, lien, encumbrance or other charge. Except as
set forth in Section 3.16 of the Xxxxxxxxxx Disclosure Schedule,
there is no loan or other asset of Xxxxxxxxxx or of any Xxxxxxxxxx
Subsidiary that has been classified by examiners or others as
"Other Loans of Concern," "Substandard," "Doubtful" or "Loss".
Set forth in Section 3.16 of the Xxxxxxxxxx Disclosure Schedule is
a complete list of the real estate acquired through foreclosure,
repossession or deed in lieu thereof ("REO") of Xxxxxxxxxx and the
Xxxxxxxxxx Subsidiaries as of March 31, 1997.
(b) All guarantees of indebtedness owed to
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, including but not limited
to those of the Federal Housing Administration, the Small Business
Administration, and other state and federal agencies, are, to the
best knowledge of Xxxxxxxxxx and Home Bank, valid and enforceable,
except to the extent enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles or doctrines.
(c) All interest rate swaps, caps, floors and option
agreements and other interest rate risk management arrangements to
which Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary is a party or by
which any of their properties or assets may be bound were entered
into in the ordinary course of business and, to the best knowledge
of Xxxxxxxxxx and Home Bank, in accordance with then-customary
practice and applicable rules, regulations and policies of thrift
regulatory authorities and with counterparties believed to be
financially responsible at the time and are legal, valid and
binding obligations and are in full force and effect. Xxxxxxxxxx
and the Xxxxxxxxxx Subsidiaries have duly performed in all
material respects all of their respective obligations thereunder
to the extent that such obligations to perform have accrued, and
to the best knowledge of Xxxxxxxxxx and Home Bank, there are no
material breaches, violations or defaults or allegations or
assertions of such by any party thereunder. None of the
transactions contemplated by this Agreement would permit: (i) a
counterparty under any interest rate swap, cap, floor and option
agreement or any other interest rate risk management agreement or
(ii) any party to any mortgage-backed security financing
arrangement, to accelerate, discontinue, terminate or otherwise
modify any such agreement or arrangement or would require
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary to recognize any gain or
loss with respect to such arrangement.
(d) Except as set forth in Section 3.16 of the
Xxxxxxxxxx Disclosure Schedule and except for pledges to secure
public and trust deposits, none of the investments reflected in
the Xxxxxxxxxx Financial Statements dated as of December 31, 1996
under the heading "Investment Securities, " and none of the
investments made by Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries
since December 31, 1996, is subject to any restriction, whether
contractual or statutory, which materially impairs the ability of
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary to freely dispose of such
investment at any time, other than those restrictions imposed on
securities held for investment under generally accepted accounting
principles. With respect to all material repurchase agreements to
which Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary is a party,
Xxxxxxxxxx or such Subsidiary has a valid, perfected first lien or
security interest in the government securities or other collateral
securing each such repurchase agreement, and the value of the
collateral securing each such repurchase agreement equals or
exceeds the amount of the debt secured by such collateral under
such agreement. Except as set forth in Section 3.16 of the
Xxxxxxxxxx Disclosure Schedule and except for a transaction
involving less than $50,000, neither Xxxxxxxxxx nor any Xxxxxxxxxx
Subsidiary has sold or otherwise disposed of any assets in a
transaction in which the acquiror of such assets or other person
has the right, either conditionally or absolutely, to require
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary to repurchase or otherwise
reacquire any such assets. Set forth in Section 3.16 of the
Xxxxxxxxxx Disclosure Schedule is a complete and accurate list of
each investment and debt security, mortgage-backed and related
securities, marketable equity securities and securities purchased
under agreements to resell owned by Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary showing as of March 31, 1997 the carrying values and
estimated fair values of investment and debt securities, the gross
carrying value and estimated fair value of the mortgage-backed and
related securities and the estimated cost and estimated fair value
of the marketable equity securities.
(e) All United States Treasury securities,
obligations of other United States Government agencies and
corporations, obligations of States of United States and their
political subdivisions, and other investment securities classified
as "held to maturity" and "available for sale" held by Xxxxxxxxxx
and the Xxxxxxxxxx Subsidiaries, as reflected in the Xxxxxxxxxx
Financial Statements dated December 31, 1996 were classified and
accounted for in accordance with F.A.S.B. 115 and the intentions
of management.
3.17 Allowance for Possible Loan Losses.
----------------------------------
(a) The allowance for possible loan losses shown on
the Xxxxxxxxxx Financial Statements as of December 31, 1996 (and
as shown on any financial statements to be delivered by Xxxxxxxxxx
to COFI pursuant to Section 5.7 hereof), to the best knowledge of
Xxxxxxxxxx and Home Bank, as of such date was (and will be as of
such subsequent financial statement dates) adequate in all
respects to provide for possible or specific losses, net of
recoveries relating to loans previously charged off, on loans
outstanding, and contained (or will contain) an additional amount
of unallocated reserves for unanticipated future losses at a level
considered adequate under the standards applied by applicable
federal regulatory authorities and based upon generally accepted
practices applicable to Home Bank. To the best knowledge of
Xxxxxxxxxx and Home Bank, the aggregate principal amount of loans
contained (or that will be contained) in the loan portfolio of
Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries as of December 31, 1996
(and as of the dates of any financial statements to be delivered
by Xxxxxxxxxx to COFI pursuant to Section 5.7 hereof), in excess
of such reserve, was (and will be) fully collectible.
(b) The sum of the aggregate amount of all
Nonperforming Assets (as defined below) and all troubled debt
restructurings (as defined under generally accepted accounting
principles) on the books of Xxxxxxxxxx and the Xxxxxxxxxx
Subsidiaries does not exceed 1.2% of total loans at the date
hereof. "Nonperforming Assets" shall mean (i) all loans and
leases (A) that are contractually past due 90 days or more in the
payment of principal and/or interest, (B) that are on nonaccrual
status, (C) where a reasonable doubt exists, in the reasonable
judgment of Home Bank, as to the timely future collectibility of
principal and/or interest, whether or not interest is still
accruing or the loan is less than 90 days past due, (D) where the
interest rate terms have been reduced and/or the maturity dates
have been extended subsequent to the agreement under which the
loan was originally created due to concerns regarding the
borrower's ability to pay in accordance with such initial terms,
(E) where a specific reserve allocation exists in connection
therewith, or (F) that have been classified "Doubtful", "Loss" or
the equivalent thereof by any regulatory authority, and (ii) all
assets classified as REO and other assets acquired through
foreclosure or repossession.
3.18 Xxxxxxxxxx Benefit Plans.
------------------------
(a) Section 3.18 of the Xxxxxxxxxx Disclosure
Schedule contains a list and a true and correct copy (or, a
description with respect to any oral employee benefit plan,
practice, policy or arrangement), including all amendments
thereto, of each compensation, consulting, employment, termination
or collective bargaining agreement, and each stock option, stock
purchase, stock appreciation right, restricted stock, life,
health, accident or other insurance, bonus, deferred or incentive
compensation, severance or separation agreement or any agreement
providing any payment or benefit resulting from a change in
control, profit sharing, retirement, or other employee benefit
plan, practice, policy or arrangement of any kind, oral or
written, covering any employee, former employee, director or
former director of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary or his
or her beneficiaries, including, but not limited to, any employee
benefit plans within the meaning of Section 3(3) of ERISA, which
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary maintains, to which
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary contributes, or under
which any employee, former employee, director or former director
of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary is covered or has
benefit rights and pursuant to which any liability of Xxxxxxxxxx
or any Xxxxxxxxxx Subsidiary exists or is reasonably likely to
occur (the "Xxxxxxxxxx Benefit Plans"). Except as set forth in
Section 3.18 of the Xxxxxxxxxx Disclosure Schedule, Xxxxxxxxxx and
the Xxxxxxxxxx Subsidiaries neither maintain nor have entered into
any Xxxxxxxxxx Benefit Plan or other document, plan or agreement
which contains any change in control provisions which would cause
an increase or acceleration of benefits or benefit entitlements to
employees or former employees of Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary or their respective beneficiaries, or other provisions,
which would cause an increase in the liability of Xxxxxxxxxx or
any Xxxxxxxxxx Subsidiary or to COFI or any COFI Subsidiary as a
result of the transactions contemplated by this Agreement or any
related action thereafter (a "Change in Control Benefit"). The
term "Xxxxxxxxxx Benefit Plans" as used herein refers to all plans
contemplated under the preceding sentences of this Section 3.18,
provided that the term "Plan" or "Plans" is used in this Agreement
for convenience only and does not constitute an acknowledgment
that a particular arrangement is an employee benefit plan within
the meaning of Section 3(3) of ERISA. Except as disclosed in
Section 3.18 of the Xxxxxxxxxx Disclosure Schedule, no Benefit
Plan is a multi-employer plan within the meaning of Section 3(37)
of ERISA.
(b) Each of the Xxxxxxxxxx Benefit Plans that is
intended to be a pension, profit sharing, stock bonus, thrift or
savings plan that is qualified under Section 401(a) of the Code
("Xxxxxxxxxx Qualified Plans") has been determined by the Internal
Revenue Service to qualify under Section 401(a) of the Code, or an
application for determination of such qualification has been
timely made to the Internal Revenue Service prior to the end of
the applicable remedial amendment period under Section 401(b) of
the Code (a copy of each such determination letter or pending
application is included in Section 3.18 of the Xxxxxxxxxx
Disclosure Schedule) and, to the best of Xxxxxxxxxx'x knowledge,
there exist no circumstances likely to adversely affect the
qualified status of any such Xxxxxxxxxx Qualified Plan. All such
Xxxxxxxxxx Qualified Plans established or maintained by Xxxxxxxxxx
or any of the Xxxxxxxxxx Subsidiaries or to which Xxxxxxxxxx or
any of the Xxxxxxxxxx Subsidiaries contribute are in compliance in
all material respects with all applicable requirements of ERISA,
and are in compliance in all material respects with all applicable
requirements (including qualification and non-discrimination
requirements ) of the Code for obtaining the tax benefits the Code
thereupon permits with respect to such Xxxxxxxxxx Qualified Plans.
Neither Xxxxxxxxxx nor any Xxxxxxxxxx Subsidiary maintains,
sponsors or contributes to a Qualified Plan that is a defined
benefit pension plan subject to Title IV of ERISA. All accrued
contributions and other payments required to be made by Xxxxxxxxxx
or any Xxxxxxxxxx Subsidiary to any Xxxxxxxxxx Benefit Plan
through December 31, 1996, have been made or reserves adequate for
such purposes as of December 31, 1996, have been set aside
therefor and are reflected in the Xxxxxxxxxx Financial Statements
dated as of December 31, 1996. Neither Xxxxxxxxxx nor any
Xxxxxxxxxx Subsidiary is in material default in performing any of
its respective contractual obligations under any of the Xxxxxxxxxx
Benefit Plans or any related trust agreement or insurance
contract, and there are no material outstanding liabilities of any
such Plan other than liabilities for benefits to be paid to
participants in such Plan and their beneficiaries in accordance
with the terms of such Plan.
(c) There is no pending or, to the best knowledge of
Xxxxxxxxxx and Home Bank, threatened litigation or pending claim
(other than routine benefit claims made in the ordinary course) by
or on behalf of or against any of the Xxxxxxxxxx Benefit Plans (or
with respect to the administration of any such Plans) now or
heretofore maintained by Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary
which allege violations of applicable state or federal law which
are reasonably likely to result in a liability on the part of
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary or any such Plan.
(d) Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries and
all other persons having fiduciary or other responsibilities or
duties with respect to any Xxxxxxxxxx Benefit Plan are and have
since the inception of each such Plan been in substantial
compliance with, and each such Plan is and has been operated in
substantial accordance with, its provisions and in substantial
compliance with the applicable laws, rules and regulations
governing such Plan, including, without limitation, the rules and
regulations promulgated by the Department of Labor, the PBGC and
the Internal Revenue Service under ERISA, the Code or any other
applicable law. Notwithstanding the foregoing, no representation
is made with respect to compliance by a third party insurance
company. No "reportable event" (as defined in Section 4043(b) of
ERISA) has occurred with respect to any Xxxxxxxxxx Qualified
Benefit Plan. Except as disclosed in Section 3.18 of the
Xxxxxxxxxx Disclosure Schedule, neither Xxxxxxxxxx, any Xxxxxxxxxx
Subsidiary nor any Xxxxxxxxxx Benefit Plan has incurred or is
reasonably likely to incur any liability for any "prohibited
transactions" (as defined in Section 406 of ERISA or Section 4975
of the Code), or any material liability under Section 601 of ERISA
or Section 4980 of the Code. All Xxxxxxxxxx Benefit Plans that
are group health plans have been operated in substantial
compliance with the group health plan continuation requirements of
Section 4980B of the Code and Section 601 of ERISA.
(e) Except as set forth in Section 3.18 of the
Xxxxxxxxxx Disclosure Schedule, neither Xxxxxxxxxx nor any
Xxxxxxxxxx Subsidiary has made any payments, or is or has been a
party to any agreement or any Xxxxxxxxxx Benefit Plan, that under
any circumstances could obligate it or its successor to make
payments that are not or will not be deductible because of
Sections 162(m) or 280G of the Code.
(f) Section 3.18 of the Xxxxxxxxxx Disclosure
Schedule describes any obligation that Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary has to provide health or welfare benefits to
retirees or other former employees, directors or their dependents
(other than rights under Section 4980B of the Code or Section 601
of ERISA), including information as to the number of retirees,
other former employees or directors and dependents entitled to
such coverage and their ages.
(g) Section 3.18 of the Xxxxxxxxxx Disclosure
Schedule lists: (i) each officer, employee and director of
Xxxxxxxxxx and any Xxxxxxxxxx Subsidiary who is eligible to
receive a Change in Control Benefit, showing the amount of each
such Change in Control Benefit, the individual's participation in
any bonus or other employee benefit plan, and such individual's
compensation from Xxxxxxxxxx and each Xxxxxxxxxx Subsidiary for
each of the calendar years 1992 through 1996 as reported by
Xxxxxxxxxx and a Xxxxxxxxxx Subsidiary on Form W-2 or Form 1099;
and (ii) a copy of each option agreement relating to Xxxxxxxxxx
Stock Options.
(h) To the best knowledge of Xxxxxxxxxx and Home
Bank, Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries have filed or
caused to be filed, and will continue to file or cause to be
filed, in a timely manner all filings pertaining to each
Xxxxxxxxxx Benefit Plan with the Internal Revenue Service, the
Department of Labor and the PBGC, as prescribed by the Code or
ERISA, or regulations issued thereunder. To the best knowledge of
Xxxxxxxxxx and Home Bank, all such filings, as amended, were
complete and accurate in all material respects as of the dates of
such filings. Notwithstanding the foregoing, no representation is
made with respect to filings by a third party insurance company.
3.19 Compliance with Environmental Laws.
----------------------------------
(a) Except as set forth in Section 3.19 of the
Xxxxxxxxxx Disclosure Schedule: (i) to the best knowledge of
Xxxxxxxxxx and Home Bank, the operations of Xxxxxxxxxx and each of
the Xxxxxxxxxx Subsidiaries comply in all material respects with
all applicable past and present Environmental Laws; (ii) to the
best knowledge of Xxxxxxxxxx and Home Bank, none of the operations
of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, no assets presently or
formerly owned or leased by Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary and no Mortgaged Premises or Participating Facility are
subject to any judicial or administrative proceedings alleging the
violation of any past or present Environmental Law, nor are they
the subject of any claims alleging damages to health or property,
pursuant to which Xxxxxxxxxx, any Xxxxxxxxxx Subsidiary or any
owner of a Mortgaged Premises or a Participating Facility would
be liable in law or equity; (iii) none of the operations of
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, no assets presently owned
or, to the best knowledge of Xxxxxxxxxx and Home Bank, formerly
owned by Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, and to the best
knowledge of Xxxxxxxxxx and Home Bank, no Mortgaged Premises or a
Participating Facility are the subject of any federal, state or
local investigation evaluating whether any remedial action is
needed to respond to a release or threatened release of any
Hazardous Substance, or any other substance into the environment,
nor has Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, or, to the best
knowledge of Xxxxxxxxxx and Home Bank, any owner of a Mortgaged
Premises or a Participating Facility been directed to conduct such
investigation, formally or informally, by any governmental agency,
nor have any of them agreed with any governmental agency or
private person to conduct any such investigation; and (iv) neither
Xxxxxxxxxx nor any Xxxxxxxxxx Subsidiary, nor, to the best
knowledge of Xxxxxxxxxx and Home Bank, any owner of a Mortgaged
Premises or a Participating Facility has filed any notice under
any Environmental Law indicating past or present treatment,
storage or disposal of a Hazardous Substance or reporting a spill
or release of a Hazardous Substance, or any other substance into
the environment.
(b) With respect to the real property currently
owned or, to the best knowledge of Xxxxxxxxxx and Home Bank,
formerly owned or currently leased by Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary ("Xxxxxxxxxx Premises"): (x) no part of the Xxxxxxxxxx
Premises has been used for the generation, manufacture, handling,
storage, or disposal of Hazardous Substances; (y) except as
disclosed in Section 3.19 of the Xxxxxxxxxx Disclosure Schedule,
the Xxxxxxxxxx Premises do not contain, and have never contained,
an underground storage tank; and (z) the Xxxxxxxxxx Premises do
not contain and are not contaminated by any quantity of a
Hazardous Substance from any source. With respect to any
underground storage tank listed in Section 3.19 of the Xxxxxxxxxx
Disclosure Statement as an exception to the foregoing, such
underground storage tank has been removed in compliance with the
Environmental Laws, and has not been the source of any release of
a Hazardous Substance into the environment, unless otherwise set
forth in Section 3.19 of the Xxxxxxxxxx Disclosure Schedule.
3.20 Contracts and Commitments. Section 3.20 of the
-------------------------
Xxxxxxxxxx Disclosure Schedule contains, and shall be supplemented
by Xxxxxxxxxx and Home Bank, as required by Section 5.10 hereof,
so as to contain at the Closing Date copies of each of the
following documents, certified by an officer of Xxxxxxxxxx to be
true and correct copies of such documents on the dates of such
certificates:
(a) a list and description of each outstanding loan
agreement, mortgage, pledge agreement or other similar document or
commitment to extend credit to any officer or director of
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, as well as a listing of
all deposits or deposit surrogates, including the amount, type and
interest being paid thereon, to which Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary is a party under which it may (contingently or
otherwise) have any liability involving any officer or director of
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary;
(b) a list and description of each outstanding
letter of credit and each commitment to issue a letter of credit
in excess of $25,000 to which Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary is a party and/or under which it may (contingently or
otherwise) have any liability;
(c) a list and description of each contract or
agreement (not otherwise included in the Xxxxxxxxxx Disclosure
Schedule or specifically excluded therefrom in accordance with the
terms of this Agreement) involving goods, services or occupancy
and which (i) has a term of more than six months; (ii) cannot be
terminated on thirty days (or less) written notice without
penalty; and (iii) involves an annual expenditure by Xxxxxxxxxx or
any Xxxxxxxxxx Subsidiary in excess of $25,000;
(d) a list and description of each contract or
commitment (other than Xxxxxxxxxx Permitted Liens as defined in
Section 3.22(c)) hereof) affecting ownership of, title to, use of,
or any interest in real property which is currently owned by
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, and a list and
description of all real property owned, leased or licensed by
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary;
(e) a list of all fees, salaries, bonuses and other
forms of compensation including but not limited to, country club
memberships, automobiles available for personal use, and credit
cards available for personal use, provided by Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary to any employee, officer, or director or
former employee, officer or director of Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary who earns in excess of $50,000 annually;
(f) a list and description of each commitment made
by Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary to or with any of its
officers, directors or employees extending for a period of more
than six months from the date hereof or providing for earlier
termination only upon the payment of a penalty or equivalent
thereto;
(g) the Articles of Incorporation, Charters, Code or
Regulations, and Bylaws and specimen certificates of each type of
security issued by Xxxxxxxxxx and each Xxxxxxxxxx Subsidiary;
(h) a list and description of each other contract or
commitment providing for payment based in any manner upon
outstanding loans or profits of Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary;
(i) a list and description of all powers of attorney
granted by Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary which are
currently in force;
(j) a list and description of all policies of
insurance currently maintained by Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary and a list and description of all unsettled or
outstanding claims of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary
which have been, or to the best knowledge of Xxxxxxxxxx and Home
Bank, will be, filed with the companies providing insurance
coverage for Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary (except for
routine claims for health benefits);
(k) each collective bargaining agreement to which
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary is a party and all
affirmative action plans or programs covering employees of
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, as well as all employee
handbooks, policy manuals, rules and standards of employment
promulgated by Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary;
(l) each lease or license with respect to real or
personal property, whether as lessor, lessee, licensor or
licensee, with annual rental or other payments due thereunder in
excess of $10,000 to which Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary
is a party, which does not expire within six months from the date
hereof and cannot be terminated upon thirty days (or less) written
notice without penalty;
(m) all employment, consulting, financial advisory,
investment banking, and professional services contracts to which
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary is a party;
(n) all judgments, orders, injunctions, court
decrees or settlement agreements arising out of or relating to the
labor and employment practices or decisions of Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary which, by their terms, continue to bind or
affect Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary;
(o) all orders, decrees, memorandums, agreements or
understandings with regulatory agencies binding upon or affecting
the current operations of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary
or any of their directors or officers in their capacities as such;
(p) all trademarks, trade names, service marks,
patents, or copyrights, whether registered or the subject of an
application for registration, which are owned by Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary or licensed from a third party;
(q) all policies formally adopted by the Board of
Directors of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary as currently
in effect with respect to environmental matters and copies of all
policies that have been in effect during the last five (5) years
regarding the performance of environmental investigations of
properties accepted as collateral for loans, including the
effective dates of all such policies; and
(r) each other agreement to which Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary is a party (which does not expire within six
months from the date hereof and cannot be terminated upon thirty
days (or less) written notice without penalty) which individually
during its term could commit Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary to an expenditure (either individually or through a
series of installments) in excess of $25,000 or which creates a
material right or benefit to receive payments, goods or services
not referred to elsewhere in this Section 3.20 including without
limitation:
(i) each agreement of guaranty or
indemnification running to any person;
(ii) each agreement containing any covenant
limiting the right of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary to
engage in any line of business or to compete with any person;
(iii) each agreement with respect to any
license, permit and similar matter that is necessary to the
operations of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary;
(iv) each agreement that requires the consent
or approval of any other party in order to consummate the Merger;
(v) each agreement relating to the servicing of
loans and each mortgage forward commitment and similar agreement
pursuant to which Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary sells to
others mortgages which it originates;
(vi) each contract relating to the purchase or
sale of financial or other futures, or any put or call option
relating to cash, securities or commodities and each interest rate
swap agreement or other agreement relating to the hedging of
interest rate risks and each agreement or arrangement described in
Section 3.16(d) hereof; and
(vii) each contract or agreement (with the
exception of the Federal National Mortgage Association or Federal
Home Loan Mortgage Corporation Seller's Guide), including but not
limited to each contract or agreement pursuant to which Xxxxxxxxxx
or any Xxxxxxxxxx Subsidiary has sold, transferred, assigned or
agreed to service any loan, which provides for any recourse or
indemnification obligation on the part of Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary; the name and address of each person which
might or could be entitled to recourse against or indemnification
from Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary; and the monetary
amount of each actual or potential recourse or indemnification
obligation under each such contract or agreement.
3.21 Defaults. There has not been any default in any
--------
material obligation to be performed by Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary under any contract or commitment, and
neither Xxxxxxxxxx nor or any Xxxxxxxxxx Subsidiary has waived,
and will not waive prior to the Effective Time, any material right
under any contract or commitment. To the best knowledge of
Xxxxxxxxxx and Home Bank, no other party to any contract or
commitment is in default in any material obligation to be
performed by such party.
3.22 Operations Since December 31, 1996. Between
----------------------------------
December 31, 1996 and the date hereof, except as set forth in
Section 3.22 of the Xxxxxxxxxx Disclosure Schedule, there has not
been:
(a) any increase in the compensation payable or to
become payable by Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary to any
employee, officer or director, other than routine annual increases
to rank and file employees consistent with past practices;
(b) except as permitted in Section 4.1(a) hereof,
any payment of dividends or other distributions by Xxxxxxxxxx to
its stockholders or any redemption by Xxxxxxxxxx of its capital
stock;
(c) any mortgage, pledge or subjection to lien,
charge or encumbrance of any kind of or on any asset, tangible or
intangible, of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, except the
following (each of which, whether arising before or after the date
hereof, is herein referred to as a "Xxxxxxxxxx Permitted Lien"):
(i) liens arising out of judgments or awards in respect of which
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary is in good faith
prosecuting an appeal or proceeding for review and in respect of
which it has secured a subsisting stay of execution pending such
appeal of proceeding; (ii) liens for taxes, assessments, and other
governmental charges or levies, the payment of which is not past
due, or as to which Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary is
diligently contesting in good faith and by appropriate proceeding
either the amount thereof or the liability therefor or both; (iii)
deposits, liens or pledges to secure payments of worker's
compensation, unemployment insurance, pensions, or other social
security obligations, or the performance of bids, tenders, leases,
contracts (other than contracts for the payment of money), public
or statutory obligations, surety, stay or appeal bonds, or similar
obligations arising in the ordinary course of business; (iv)
zoning restrictions, easements, licenses and other restrictions on
the use of real property or any interest therein, or minor
irregularities in title thereto, which do not materially impair
the use of such property or the merchantability or the value of
such property or interest therein; (v) purchase money mortgages or
other purchase money or vendor's liens or security interests
(including, without limitation, finance leases), provided that no
such mortgage, lien or security interest shall extend to or cover
any other property of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary
other than that so purchased; and (vi) pledges and liens given to
secure deposits and other liabilities of Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary arising in the ordinary course of business;
(d) any creation or assumption of indebtedness
(including the extension or renewal of any existing indebtedness,
or the increase thereof) by Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary for borrowed money, or otherwise, other than in the
ordinary course of business, none of which is in default;
(e) the establishment of any new, modification of or
amendment to, or increase in the formula for contributions to or
benefits under, any Xxxxxxxxxx Benefit Plan by Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary;
(f) any action by Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary seeking any cancellation of, or decrease in the insured
limit under, or increase in the deductible amount or the insured's
retention (whether pursuant to coinsurance or otherwise) of or
under, any policy of insurance maintained directly or indirectly
by Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary on any of their
respective assets or businesses, including but not by way of
limitation, fire and other hazard insurance on its assets,
automobile liability insurance, general public liability
insurance, and directors' and officers' liability insurance; and
if an insurer takes any such action, Xxxxxxxxxx shall promptly
notify COFI;
(g) any change in Xxxxxxxxxx'x independent auditors,
historic methods of accounting (other than as required by
generally accepted accounting principles or regulatory accounting
principles), or in its system for maintaining its equipment and
real estate;
(h) any purchase, whether for cash or secured or
unsecured obligations (including finance leases) by Xxxxxxxxxx or
any Xxxxxxxxxx Subsidiary of any fixed asset which either (i) has
a purchase price individually or in the aggregate in excess of
$50,000 or (ii) is outside of the ordinary course of business;
(i) any sale or transfer of any asset in excess of
$50,000 of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary or outside of
the ordinary course of business with the exception of loans and
marketable securities that are held for sale and sold in the
ordinary course of business at market prices;
(j) any cancellation or compromise of any debt to,
claim by or right of, Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary
except in the ordinary course of business;
(k) any amendment or termination of any contract or
commitment to which Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary is a
party, other than in the ordinary course of business;
(l) any material damage or destruction to any assets
or property of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary whether or
not covered by insurance;
(m) any change in the loan underwriting policies or
practices of any Xxxxxxxxxx Subsidiary;
(n) any transaction of business or activity
undertaken by Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary outside the
ordinary course of business consistent with past practices;
(o) any agreement or commitment to do any of the
foregoing; or
(p) any event or condition of any character (other
than changes in legal, economic or other conditions which are not
specially or uniquely applicable to Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary) adversely affecting the business, operations or
financial condition of Xxxxxxxxxx on a consolidated basis.
3.23 Corporate Records. The corporate record books,
-----------------
transfer books and stock ledgers of Xxxxxxxxxx and each Xxxxxxxxxx
Subsidiary are complete and accurate in all material respects and
reflect all meetings, consents and other material actions of the
organizers, incorporators, stockholders, Boards of Directors and
committees of the Boards of Directors of Xxxxxxxxxx and each such
Subsidiary, and all transactions in their respective capital
stocks, since their respective inceptions.
3.24 Undisclosed Liabilities. All of the Liabilities
-----------------------
have, in the case of Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries,
been reflected, disclosed or reserved against in the Xxxxxxxxxx
Financial Statements as of December 31, 1996 or in the notes
thereto, and Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries have no
other Liabilities except (a) Liabilities incurred since December
31, 1996 in the ordinary course of business or (b) as disclosed in
Section 3.24 of the Xxxxxxxxxx Disclosure Schedule.
3.25 Assets.
------
(a) Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries have
good and marketable title to their real properties, including any
leaseholds and ground leases, and their other assets and
properties, all as reflected as owned or held by Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary in the Xxxxxxxxxx Financial Statements dated
as of December 31, 1996, and those acquired since such date,
except for (i) assets and properties disposed of since such date
in the ordinary course of business and (ii) Xxxxxxxxxx Permitted
Liens none of which, in the aggregate, except as set forth in the
Xxxxxxxxxx Financial Statements dated December 31, 1996 or in
Section 3.25 of the Xxxxxxxxxx Disclosure Schedule, are material
to the assets of Xxxxxxxxxx on a consolidated basis. All
buildings, structures, fixtures and appurtenances comprising part
of the real properties of Xxxxxxxxxx and the Xxxxxxxxxx
Subsidiaries (whether owned or leased) are, in the opinion of
management of Xxxxxxxxxx and Home Bank, in good operating
condition and have been well maintained, reasonable wear and tear
excepted. Title to all real property owned by Xxxxxxxxxx and the
Xxxxxxxxxx Subsidiaries is held in fee simple, except as otherwise
noted in the Xxxxxxxxxx Financial Statements as of December 31,
1996 or as set forth in Section 3.25 of the Xxxxxxxxxx Disclosure
Schedule. Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries have title
or other rights to its assets sufficient in all material respects
for the conduct of their respective businesses as presently
conducted, and except as set forth in the Xxxxxxxxxx Financial
Statements dated as of December 31, 1996 or in Section 3.25 of the
Xxxxxxxxxx Disclosure Schedule, such assets are free, clear and
discharged of and from any and all liens, charges, encumbrances,
security interests and/or equities which are material to
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary.
(b) All leases pursuant to which Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary, as lessee, leases real or personal property
are, to the best knowledge of Xxxxxxxxxx and Home Bank, valid,
effective, and enforceable against the lessor in accordance with
their respective terms. There is not under any of such leases any
existing default, or any event which with notice or lapse of time
or both would constitute a default, with respect to either
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, or to the best knowledge
of Xxxxxxxxxx and Home Bank, the other party. Except as disclosed
in Section 3.25 of the Xxxxxxxxxx Disclosure Schedule, none of
such leases contains a prohibition against assignment by
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, by operation of law or
otherwise, or any other provision which would preclude the
surviving corporation or resulting institution or any Xxxxxxxxxx
Subsidiary from possessing and using the leased premises for the
same purposes and upon the same rental and other terms upon the
consummation of the Merger as are applicable to the use by
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary as of the date of this
Agreement.
3.26 Indemnification. To the best knowledge of
---------------
Xxxxxxxxxx and Home Bank, except as set forth in Section 3.26 of
the Xxxxxxxxxx Disclosure Schedule, no action or failure to take
action by any director, officer, employee or agent of Xxxxxxxxxx
or any Xxxxxxxxxx Subsidiary has occurred which would give rise to
a claim by any such person for indemnification from Xxxxxxxxxx or
any Xxxxxxxxxx Subsidiary under the corporate indemnification
provisions of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary in effect on
the date of this Agreement.
3.27 Insider Interests. All outstanding loans and other
-----------------
contractual arrangements (including deposit relationships) between
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary and any officer, director
or employee of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary conform to
the applicable rules and regulations and requirements of all
applicable regulatory agencies which were in effect when such
loans and other contractual arrangements were entered into.
Except as set forth in Section 3.27 of the Xxxxxxxxxx Disclosure
Schedule, no officer, director or employee of Xxxxxxxxxx or any
Xxxxxxxxxx Subsidiary has any material interest in any property,
real or personal, tangible or intangible, used in or pertaining to
the business of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary.
3.28 Registration Obligations. Except as set forth in
------------------------
Section 3.28 of the Xxxxxxxxxx Disclosure Schedule, neither
Xxxxxxxxxx nor any Xxxxxxxxxx Subsidiary is under any obligation,
contingent or otherwise, which will survive the Effective Time by
reason of any agreement to register any of its securities under
the Securities Act or other federal or state securities laws or
regulations.
3.29 Regulatory, Tax and Accounting Matters. Xxxxxxxxxx
--------------------------------------
and Home Bank have not taken or agreed to take any action, nor
does it have knowledge of any fact or circumstance, that would (i)
materially impede or delay the consummation of the transactions
contemplated by this Agreement or the ability of the parties to
obtain any approval of any regulatory authority required for the
transactions contemplated by this Agreement or to perform their
covenants and agreements under this Agreement or (ii) prevent the
Merger from qualifying as a pooling of interests for accounting
purposes or the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code.
3.30 Brokers and Finders. Except as set forth in the
-------------------
agreement with Xxxxxxx Xxxx & Co., a division of Xxxxx, Xxxxxxxx &
Xxxxx, Inc., dated May 8, 1996 (which agreement has not been
amended since such date), a copy of which has previously been
provided to COFI, neither Xxxxxxxxxx nor any Xxxxxxxxxx Subsidiary
nor any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finders'
fees, and no other broker or finder has acted directly or
indirectly for Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary in
connection with this Agreement or the transactions contemplated
hereby.
3.31 Accuracy of Information. The statements of
-----------------------
Xxxxxxxxxx and Home Bank contained in this Agreement, the
Schedules hereto and in any other written document executed and
delivered by or on behalf of Xxxxxxxxxx or Home Bank pursuant to
the terms of this Agreement are true and correct in all material
respects.
3.32 Fairness Opinion. Xxxxxxxxxx has received from
----------------
Xxxxxxx Xxxx & Co., a division of Xxxxx, Xxxxxxxx & Xxxxx, Inc. a
fairness opinion, dated as of the date of this Agreement, to the
effect that the Merger Consideration to be received by the holders
of Xxxxxxxxxx Common Stock pursuant to this Agreement and the
Company Merger is fair to such holders from a financial point of
view.
3.33 Governmental Approvals and Other Conditions. To the
-------------------------------------------
best knowledge of Xxxxxxxxxx and Home Bank, there is no reason
relating specifically to Xxxxxxxxxx or any of its Subsidiaries why
(a) the approvals that are required to be obtained from regulatory
authorities having approval authority in connection with the
transactions contemplated hereby should not be granted, (b) such
regulatory approvals should be subject to a condition which would
differ from conditions customarily imposed by such regulatory
authorities in orders approving acquisitions of the type
contemplated hereby or (c) any of the conditions precedent as
specified in Article VI hereof to the obligations of any of the
parties hereto to consummate the transactions contemplated hereby
are unlikely to be fulfilled within the applicable time period or
periods required for satisfaction of such condition or conditions.
ARTICLE IV
COVENANTS OF XXXXXXXXXX
4.1 Business in Ordinary Course.
---------------------------
(a) Without the prior written consent of COFI,
Xxxxxxxxxx shall not declare or pay any dividend or make any other
distribution with respect to its capital stock whether in cash,
stock or other property, after the date of this Agreement, except
it may declare and pay its regular quarterly cash dividend of not
more than $.14 per share on Xxxxxxxxxx Common Stock; provided the
declaration of the last dividend by Xxxxxxxxxx prior to
consummation of the Company Merger and the payment thereof shall
be coordinated with, and subject to the approval of COFI, so as to
preclude any duplication of dividend benefit.
(b) Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries shall
continue to carry on, after the date hereof, their respective
businesses and the discharge or incurring of obligations and
liabilities, only in the usual, regular and ordinary course of
business, as heretofore conducted, and by way of amplification and
not limitation, Xxxxxxxxxx and each of the Xxxxxxxxxx Subsidiaries
will not, without the prior written consent of COFI (which consent
in the case of subparts (xiv) and (xvii) below shall not be
unreasonably withheld or delayed):
(i) issue any capital stock or any options,
warrants, or other rights to subscribe for or purchase capital
stock or any securities convertible into or exchangeable for any
capital stock, except pursuant to the Xxxxxxxxxx Stock Options
outstanding on the date hereof;
(ii) directly or indirectly redeem, purchase or
otherwise acquire any capital stock or ownership interests of
Xxxxxxxxxx or any of the Xxxxxxxxxx Subsidiaries;
(iii) effect a reclassification,
recapitalization, split-up, exchange of shares, readjustment or
other similar change in or to any capital stock or otherwise
reorganize or recapitalize;
(iv) change its Charter, Articles of
Incorporation, Code of Regulations or Bylaws;
(v) enter into or modify any employment
agreement, severance agreement, change of control agreement, or
plan relative to the foregoing; or grant any increase (other than
ordinary and normal increases to rank and file employees
consistent with past practices) in the compensation payable or to
become payable to directors, officers or employees except as
required by law, pay or agree to pay any bonus, or adopt or make
any change in any bonus, insurance, pension, or other Xxxxxxxxxx
Benefit Plan and provided further that Xxxxxxxxxx and Home Bank
shall be permitted, consistent with past practices, to make
contributions to the employee stock ownership plan and the 401(k)
plan of Xxxxxxxxxx, pursuant to its existing program for such
contributions, which shall accrue from the date hereof to the
Closing Date;
(vi) except for the short-term renewal of
Federal Home Loan Bank ("FHLB") advances outstanding at the date
of this Agreement, raising short-term funds against its existing
line of credit with the FHLB and deposit-taking in the ordinary
course of its business, borrow or agree to borrow any funds,
including but not limited to repurchase transactions, or
indirectly guarantee or agree to guarantee any obligations of
others;
(vii) make or commit to make any new loan or
letter of credit, or any new or additional discretionary advance
under any existing loan or line of credit, or restructure any
existing loan or line of credit, (x) in the case of a consumer
loan or extension of credit, in a principal amount in excess of
$250,000 or that would increase the aggregate credit outstanding
in this category to any one borrower (or group of affiliated
borrowers) to more than $250,000, (y) in the case of a loan
secured by an owner occupied single-family principal residence, in
a principal amount in excess of $350,000, or (z) in the case of a
commercial loan or mortgage in a principal amount in excess of
$500,000 or that would increase the aggregate credit outstanding
in this category to any one borrower (or group of affiliated
borrowers) to more than $500,000, without the prior written
consent of COFI acting through its Chief Executive Officer in a
written notice to Xxxxxxxxxx, which approval or rejection shall be
given on a timely basis after delivery by Xxxxxxxxxx to such
officer of COFI of the complete loan package;
(viii) make any material changes in its
policies concerning loan underwriting or which persons may approve
loans;
(ix) enter into any securities transaction for
its own account or purchase or otherwise acquire any investment
security for its own account other than U.S. Treasury obligations
with maturities of less than one year and deposits in an overnight
account at the FHLB of Cincinnati, provided COFI's consent shall
not be unreasonably withheld or delayed relating to the purchase
of other readily marketable investment securities;
(x) increase or decrease the rate of interest
paid on time deposits or on certificates of deposit, except in a
manner and pursuant to policies consistent with past practices;
(xi) enter into, modify or extend any
agreement, contract or commitment out of the ordinary course of
business or having a term in excess of six months and involving an
expenditure in excess of ten thousand dollars ($10,000), other
than letters of credit, loan agreements, deposit agreements, and
other lending, credit and deposit documents made in the ordinary
course of business;
(xii) except in the ordinary course of
business, place on any of its assets or properties any mortgage,
pledge, lien, charge, or other encumbrance;
(xiii) cancel any material indebtedness owing
to it or any claims which it may possess or waive any rights of
material value;
(xiv) sell or otherwise dispose of any real
property or any material amount of tangible or intangible personal
property other than (a) properties acquired in foreclosure or
otherwise in the ordinary collection of indebtedness owed to Home
Bank, (b) student loans or (c) loans which are held for sale by
Home Bank and are sold in the secondary market within sixty (60)
days of origination;
(xv) foreclose upon or otherwise take title to
or possession or control of any real property without first
obtaining a phase one environmental report thereon; provided,
however, that Home Bank and its Subsidiaries shall not be required
to obtain such a report with respect to single family,
non-agricultural residential property of one acre or less to be
foreclosed upon unless it has reason to believe that such property
might contain Hazardous Substances;
(xvi) knowingly or wilfully commit any act or
fail to commit any act which will cause a material breach of any
agreement, contract or commitment;
(xvii) purchase any real or personal property or
make any capital expenditure where the amount paid or committed
therefor is in excess of twenty-five thousand dollars ($25,000),
except for outstanding commitments set forth in Section 3.20 of
the Xxxxxxxxxx Disclosure Schedule;
(xviii) in the case of Home Bank, voluntarily
make any material changes in or to its asset and deposit mix;
(xix) engage in any activity or transaction
outside the ordinary course of business;
(xx) enter into or acquire any derivatives
contract or structured note;
(xxi) enter into any new, or modify, amend or
extend the terms of any existing contracts relating to the
purchase or sale of financial or other futures, or any put or call
option relating to cash, securities or commodities or any interest
rate swap agreements or other agreements relating to the hedging
of interest rate risk;
(xxii) take any action that would (A)
materially impede or delay the consummation of the transactions
contemplated by this Agreement or the ability of the parties
hereto to obtain any approval of any regulatory authority required
for the transactions contemplated by this Agreement or to perform
its covenants and agreements under this Agreement or (B) prevent
the Merger from qualifying as a pooling of interests for
accounting purposes or as a reorganization within the meaning of
Section 368(a) of the Code; or
(xxiii) agree in writing or otherwise to take
any of the foregoing actions or engage in any of the foregoing
activities.
Nothing contained in this Section 4.1(b) is intended to
impose an obligation upon Xxxxxxxxxx or Home Bank to take any
action in violation of the fiduciary duties of its directors to
its stockholders.
(c) Xxxxxxxxxx and the Xxxxxxxxxx Subsidiaries shall
not, without the prior written consent of COFI, engage in any
transaction or take any action that would render untrue any of the
representations and warranties of Xxxxxxxxxx contained in Article
III hereof, if such representations and warranties were given as
of the date of such transaction or action.
(d) Xxxxxxxxxx will, and will cause the Xxxxxxxxxx
Subsidiaries to, use their best efforts to maintain their
respective properties and assets in their present state of repair,
order and condition, reasonable wear and tear excepted, and to
maintain and keep in full force and effect all policies of
insurance presently in effect, including insurance of accounts
with the FDIC. Xxxxxxxxxx will, and will cause the Xxxxxxxxxx
Subsidiaries to, take all requisite action (including without
limitation the making of claims and the giving of notices)
pursuant to its directors' and officers' liability insurance
policy or policies in order to preserve all rights thereunder with
respect to all matters which could reasonably give rise to a
claim prior to the Effective Time.
(e) Xxxxxxxxxx shall promptly notify COFI in writing
of the occurrence of any matter or event known to and directly
involving Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary that is
reasonably likely to result in a Material Adverse Effect on
Xxxxxxxxxx or impair the ability of Xxxxxxxxxx or Home Bank to
consummate the transactions contemplated herein.
(f) Xxxxxxxxxx shall provide to COFI such reports on
litigation involving Xxxxxxxxxx and each of the Xxxxxxxxxx
Subsidiaries as COFI shall reasonably request, provided that
Xxxxxxxxxx shall not be required to divulge information to the
extent that, in the good faith opinion of its counsel, by doing
so, it would risk waiver of the attorney-client privilege to its
detriment.
4.2 Conforming Accounting and Reserve Policies;
------------------------------------------
Restructuring Expenses. At the request of COFI, Home Bank agrees
----------------------
immediately prior to Closing and after satisfaction or waiver of
the conditions to Closing set forth in Article VI hereof, to
establish and take such reserves and accruals as COFI reasonably
shall request to conform Home Bank's loan, accrual, reserve and
other accounting policies to the policies of Charter One Bank,
provided however, such requested conforming adjustments shall not
be taken into account in determining whether Xxxxxxxxxx has
experienced a Material Adverse Effect.
4.3 Certain Actions.
---------------
(a) Neither Xxxxxxxxxx (nor any of its Subsidiaries)
(i) shall solicit, initiate, participate in discussions of, or
encourage or take any other action to facilitate (including by way
of the disclosing or furnishing of any information that it is not
legally obligated to disclose or furnish) any inquiry or the
making of any proposal relating to any Acquisition Proposal (as
defined below) with respect to itself or any of its Subsidiaries
or (ii) shall (A) solicit, initiate, participate in discussions
of, or encourage or take any other action to facilitate any
inquiry or proposal, or (B) enter into any agreement, arrangement,
or understanding (whether written or oral) regarding any proposal
or transaction providing for or requiring it to abandon, terminate
or fail to consummate this Agreement, or compensating it or any
of its Subsidiaries under any of the instances described in this
clause. Xxxxxxxxxx and Home Bank shall immediately instruct and
otherwise use their best efforts to cause their directors,
officers, employees, agents, advisors (including, without
limitation, any investment banker, attorney, or accountant
retained by it or any of its Subsidiaries), consultants and other
representatives to comply with such prohibitions. Xxxxxxxxxx and
Home Bank shall immediately cease and cause to be terminated any
existing activities, discussions, or negotiations with any parties
conducted heretofore with respect to such activities.
Notwithstanding the foregoing, Xxxxxxxxxx may provide information
at the request of or enter into negotiations with a third party
with respect to an Acquisition Proposal if the Board of Directors
of Xxxxxxxxxx determines, in good faith after consultation with
counsel, that the exercise of its fiduciary duties to Xxxxxxxxxx'x
stockholders under applicable law requires it to take such action,
and, provided further, that Xxxxxxxxxx may not, in any event,
provide to such third party any information which it has not
provided to COFI. Xxxxxxxxxx shall promptly notify COFI orally
and in writing in the event it receives any such inquiry or
proposal and shall provide reasonable detail of all relevant facts
relating to such inquiries. This Section shall not prohibit
accurate disclosure by Xxxxxxxxxx in any document (including the
Proxy Statement and the Registration Statement) or other
disclosure under applicable law if in the opinion of the Board of
Directors of Xxxxxxxxxx, disclosure is appropriate under
applicable law.
(b) "Acquisition Proposal" shall, with respect to
Xxxxxxxxxx, mean any of the following (other than the Merger):
(i) a merger or consolidation, or any similar transaction of any
company with either Xxxxxxxxxx or any Subsidiary of Xxxxxxxxxx,
(ii) a purchase lease or other acquisition of a material portion
of all the assets of either Xxxxxxxxxx or any Subsidiary of
Xxxxxxxxxx, (iii) a purchase or other acquisition of "beneficial
ownership" by any "person" or "group" (as such terms are defined
in Section 13(d)(3) of the Exchange Act) (including by way of
merger, consolidation, share exchange, or otherwise) which would
cause such person or group to become the beneficial owner of
securities representing 25% or more of the voting power of either
Xxxxxxxxxx or any Subsidiary of Xxxxxxxxxx, (iv) a tender or
exchange offer to acquire securities representing 25% or more of
the voting power of Xxxxxxxxxx, (v) a public proxy or consent
solicitation made to stockholders of Xxxxxxxxxx seeking proxies in
opposition to any proposal relating to any of the transactions
contemplated by this Agreement, (vi) the filing of an application
or notice with the OTS or any other federal or state regulatory
authority (which application has been accepted for processing)
seeking approval to engage in one or more of the transactions
referenced in clauses (i) through (iv) above, or (vii) the making
of a bona fide offer to the Board of Directors Xxxxxxxxxx or Home
Bank by written communication, that is or becomes the subject of
public disclosure, to engage in one or more of the transactions
referenced in clauses (i) through (v) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Inspection of Records; Confidentiality.
--------------------------------------
(a) COFI and Xxxxxxxxxx shall each afford to the
other and to the other's accountants, counsel and other
representatives (and their Subsidiaries) full access during normal
business hours during the period prior to the Effective Time to
all of their respective properties, books, contracts, commitments
and records, including all attorneys' responses to auditors'
requests for information, and accountants' work papers, developed
by either of them or their respective Subsidiaries or their
respective accountants or attorneys, and will permit each other
and their respective representatives to discuss such information
directly with each other's officers, directors, employees,
attorneys and accountants. COFI and Xxxxxxxxxx shall each use
their best efforts to furnish to the other all other information
concerning its business, properties and personnel as such other
party may reasonably request; however, such access may be limited
by the party from whom access is sought so as to avoid
unreasonable disruption or interference with such party's business
operations, as such party may reasonably determine. Any failure
to comply with this covenant shall be disregarded if promptly
corrected without material adverse consequences to the other
party. The availability or actual delivery of information shall
not affect the representations, warranties, covenants, and
agreements of the party providing such information that are
contained in this Agreement or in any certificates or other
documents delivered pursuant hereto.
(b) All information disclosed by any party to any
other party to this Agreement, whether prior or subsequent to the
date of this Agreement including, without limitation, any
information obtained pursuant to this Section 5.1, shall be kept
confidential by such other party and shall not be used by such
other party otherwise as herein contemplated. In the event that
this Agreement is terminated, each party shall return all
documents furnished hereunder, shall destroy all documents or
portions thereof prepared by such other party that contain
information furnished by another party pursuant hereto and, in any
event, shall hold all information confidential unless or until
such information is or becomes a matter of public knowledge.
5.2 Registration Statement; Stockholder Approval. As
--------------------------------------------
soon as practicable after the date hereof, COFI shall file the
Registration Statement with the SEC, and Xxxxxxxxxx and COFI shall
use their best efforts to cause the Registration Statement to
become effective under the Securities Act. COFI will take any
action required to be taken under the applicable blue sky or
securities laws in connection with the issuance of the shares of
COFI Common Stock in the Company Merger. Each party shall furnish
all information concerning it and the holders of its capital stock
as the other party may reasonably request in connection with such
action. Xxxxxxxxxx shall call the Xxxxxxxxxx Stockholders'
Meeting as soon as reasonably practicable after the date of this
Agreement for the purpose of voting upon this Agreement and the
Company Merger. In connection with the Xxxxxxxxxx Stockholders'
Meeting, (i) COFI and Xxxxxxxxxx shall jointly prepare the Proxy
Statement as part of the Registration Statement and Xxxxxxxxxx
shall mail the Proxy Statement to its stockholders and (ii) the
Board of Directors of Xxxxxxxxxx shall recommend to its
stockholders the approval of this Agreement and the Company
Merger; provided, however, that such recommendation may be
withdrawn, modified, or amended, or not made at all, after the
receipt by Xxxxxxxxxx of an offer to effect an Acquisition
Proposal (as defined in Section 4.3 hereof) with Xxxxxxxxxx to the
extent the Board of Directors of Xxxxxxxxxx reasonably determines
that, in the exercise of its fiduciary obligations after
consultation with counsel, it has a duty to do so.
5.3 Agreements of Affiliates. As soon as practicable
------------------------
after the date of this Agreement, Xxxxxxxxxx shall deliver to COFI
a letter, reviewed by its counsel, identifying all persons whom
Xxxxxxxxxx believes to be "affiliates" of Xxxxxxxxxx for purposes
of Rule 145 under the Securities Act or for purposes of qualifying
for pooling of interests accounting treatment for the Merger.
Xxxxxxxxxx shall use its best efforts to cause each person who is
so identified as an "affiliate" to deliver to COFI, as soon as
practicable thereafter, a written agreement, substantially in the
form of Exhibit D, providing that from the date of such agreement
each such person will agree not to sell, pledge, transfer or
otherwise dispose of any shares of stock of Xxxxxxxxxx held by
such person or any shares of COFI Common Stock to be received by
such person in the Company Merger (i) during the period commencing
30 days prior to the Company Merger and ending at the time of
publication of financial results covering at least 30 days of
combined operations after the Company Merger and (ii) at any time,
except in compliance with the applicable provisions of the
Securities Act and other applicable laws and regulations. Prior
to the Effective Time, Xxxxxxxxxx shall amend and supplement such
letter and use its best efforts to cause each additional person
who is identified as an "affiliate" to execute a written agreement
as set forth in this Section 5.3.
5.4 Expenses. Each party hereto shall bear its own
--------
expenses incident to preparing, entering into and carrying out
this Agreement and to consummating the Merger. Notwithstanding
the foregoing, COFI and Xxxxxxxxxx will share equally all third
party printing costs incurred with respect to the Registration
Statement and Proxy Statement in preliminary and final form. The
printer shall be Xxxxx or such other printer selected by COFI that
is reasonably acceptable to Xxxxxxxxxx.
5.5 Cooperation. Each party covenants that it will use
-----------
its best efforts to bring about the transactions contemplated by
this Agreement as soon as practicable, unless this Agreement is
terminated as provided herein. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by
this Agreement at the earliest practicable time. All third party
costs and expenses incurred by Home Bank at the direction of COFI
in connection with making available to Home Bank's customers
materials relative to the combination of Home Bank and Charter One
Bank, shall be paid by COFI or Charter One Bank. In case at any
time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of the parties, shall take all such
necessary action. Each party shall use its reasonable best
efforts to preserve for itself and the other parties hereto each
available legal privilege with respect to the confidentiality of
their negotiations and related communications, including the
attorney-client privilege.
5.6 Regulatory Applications. The parties shall, as soon
-----------------------
as practicable after the date of this Agreement, file all
necessary applications with all applicable regulatory authorities,
and shall use their best efforts to respond as promptly as
practicable to all inquiries received concerning said
applications. In the event the Merger is challenged or opposed by
any administrative or legal proceeding, whether by the United
States Department of Justice or otherwise, the determination of
whether and to what extent to seek appeal or review,
administrative or otherwise, or other appropriate remedies shall
be made by COFI after consultation with Xxxxxxxxxx. The party
filing an application shall deliver a copy thereof to the other
parties hereto in advance of filing and copies of all responses
from or written communications from regulatory authorities
relating to the Merger or this Agreement (to the extent permitted
by law), and the filing party shall also deliver a final copy of
each regulatory application to the other parties promptly after it
is filed with the appropriate regulatory authority. Each party
shall advise the other parties periodically of the status of each
regulatory application.
5.7 Financial Statements and Reports. From the date of
--------------------------------
this Agreement and prior to the Effective Time: (a) Xxxxxxxxxx
will deliver to COFI not later than forty-five (45) days after the
end of any fiscal quarter, the Report of Condition and Income
filed by Home Bank with the OTS; (b) COFI and Xxxxxxxxxx shall
deliver to each other not later than forty-five (45) days after
the end of each quarter, its Report on Form 10-Q for such quarter
as filed with the SEC which shall be prepared in conformity with
generally accepted accounting principles and the rules and
regulations of the SEC; and (c) each party will deliver to the
others any and all other material reports filed with the SEC, the
FDIC, the OTS, or any other regulatory agency within five (5)
business days of the filing of any such report.
5.8 Notice. At all times prior to the Effective Time,
------
each party shall promptly notify the other in writing of the
occurrence of any event which will or may result in the failure to
satisfy any of the conditions specified in Sections 6.1 or 6.2
hereof. In the event that any party becomes aware of the
occurrence or impending occurrence of any event which would
constitute or cause a breach by it of any of its representations
and warranties, covenants or agreements herein in any material
respect, or would have constituted or caused a breach by it of its
representations and warranties, covenants or agreements herein in
any respect, had such an event occurred or been known prior to the
date hereof, said party shall immediately give detailed and
written notice thereof to the other parties, and shall, unless the
same has been waived in writing by the other parties, use its
reasonable efforts to remedy the same within 30 days, provided
that such efforts, if not successful, shall not be deemed to
satisfy any condition precedent to the Merger.
5.9 Press Release. Except as provided in Section 4.3(a)
-------------
or as otherwise reasonably determined by a party to comply with
its legal obligations, at all times prior to the Effective Time,
the parties shall mutually agree to the issuance of any press
release or other information to the press or any third party for
general circulation with respect to this Agreement or the
transactions contemplated hereby.
5.10 Delivery of Supplements to Disclosure Schedules.
-----------------------------------------------
Five (5) business days prior to the Effective Time, each party
will supplement or amend its Disclosure Schedule with respect to
any matter hereafter arising which, if existing or occurring at or
prior to the date of this Agreement, would have been required to
be set forth or described in such Disclosure Schedule or which is
necessary to correct any information in the Disclosure Schedule or
in any representation and warranty made by the disclosing party
which has been rendered inaccurate thereby. For purposes of
determining the accuracy of the representations and warranties of
COFI ,Xxxxxxxxxx and Home Bank contained, respectively, in
Articles II and III hereof in order to determine the fulfillment
of the conditions set forth in Section 6.1(a) and 6.2(a) hereof as
of the date of this Agreement, the Disclosure Schedule of each
party shall be deemed to include only that information contained
therein on the date it is initially delivered to the other party.
5.11 Litigation Matters. Xxxxxxxxxx and Home Bank will
------------------
consult with COFI about any proposed settlement, or any
disposition of, any litigation involving amounts in excess of
$10,000.
5.12 Tax Opinion. COFI agrees to obtain a written
-----------
opinion of Silver, Xxxxxxxx & Xxxx, L.L.P., addressed to COFI and
Xxxxxxxxxx, dated the Closing Date, subject to the representations
and assumptions referred to therein, and substantially to the
effect that (i) the Company Merger will constitute a tax-free
reorganization within the meaning of Section 368(a) of the Code
and that COFI, Merger Sub and Xxxxxxxxxx will each be a party to a
reorganization; (ii) that no gain or loss would be recognized by
any stockholder of Xxxxxxxxxx upon the exchange of Xxxxxxxxxx
Common Stock solely for COFI Common Stock in the Company Merger,
and that the basis of the COFI Common Stock received by each
stockholder of Xxxxxxxxxx who exchanges Xxxxxxxxxx Common Stock
solely for COFI Common Stock in the Company Merger will be the
same as the basis of the Xxxxxxxxxx Common Stock surrendered and
exchanged therefor (subject to any adjustments required as the
result of receipt of cash in lieu of a fractional share of COFI
Common Stock); (iii) the holding period of the COFI Common Stock
received by a stockholder of Xxxxxxxxxx in the Company Merger will
include the holding period of the Xxxxxxxxxx Common Stock
surrendered and exchanged therefor, provided that such shares of
Xxxxxxxxxx Common Stock were held as a capital asset by such
stockholder at the Effective Time; and (iv) that cash received by
a Xxxxxxxxxx stockholder in lieu of a fractional share interest of
COFI Common Stock as part of the Company Merger will be treated as
having been received as a distribution in full payment in exchange
for the fractional share interest of COFI Common Stock which such
stockholder would otherwise be entitled to receive and will
qualify as a capital gain or loss (assuming the Xxxxxxxxxx Common
Stock was a capital asset in such stockholder's hands at the
Effective Time).
5.13 Written Agreements with Employees; Benefits and
-----------------------------------------------
Related Matters.
---------------
(a) Written Agreements with Employees. COFI shall
---------------------------------
assume all of the obligations of Home Bank under those five (5)
Change In Control Agreements between Xxxxxxxxxx, Home Bank and
Xxxxx X. Xxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxxxx, Xxxx X.
Xxxx and Xxxxxx X. Xxxxx, each dated August 30, 1996 (the
"Severance Agreements"), and shall assume the Change In Control
Benefit obligation of Home Bank under that certain Employment
Agreement between Xxxxxxx X. Valerian, Xxxxxxxxxx, and Home Bank
dated August 28, 1996 (the "Employment Agreement") subject to the
characterization and method of payment thereof being made in a
manner that complies with accounting for the Merger as a pooling
of interests.
(b) General Severance. Each person employed by the
-----------------
Xxxxxxxxxx Subsidiaries as of December 31, 1996 who is employed
by the Xxxxxxxxxx Subsidiaries immediately prior to the Effective
Time (other than a person named in subsection (a) above) will be
entitled to receive (in lieu of any other form of severance) the
severance package described below if such person's employment is
terminated without cause within one year after the Effective Time.
In addition, any such employee of the Xxxxxxxxxx Subsidiaries who
voluntarily resigns after being notified by COFI that, as a
condition of employment, such employee must work at a location
outside of the Cleveland MSA or that such employee's base salary
will be decreased, in any case within one year after the Effective
Time, will be entitled to the severance package described below.
The severance package shall consist of (i) three (3) weeks base
pay for every year of full time service with the Xxxxxxxxxx
Subsidiaries prior to the Effective Time, up to a maximum of one
year of base pay, and (ii) continued health insurance coverage for
a period of 90 days after separation of service with Charter
Resources Ohio, Inc., a wholly owned subsidiary of Charter One
Bank ("Charter Resources") paying the employer's portion (50%) of
the health insurance premium. At the request of a severed
employee who is entitled to the aforesaid severance package,
outplacement services will be provided by Charter Resources. COFI
acknowledges that the consummation of the Merger will constitute
both a change in control and change in circumstances under the
Severance Agreements and the Employment Agreement.
(c) Continuing Employees. To the extent permitted
--------------------
by applicable law, the former employees of Home Bank (but
specifically excluding any person named in subsection (a) above
whose employment is terminated and then rehired (a "New
Employee")) who become employees of Charter One Bank or any other
COFI Subsidiary (the "Continuing Employees") shall continue to
participate in the Xxxxxxxxxx Benefit Plans, except where any such
Plan is terminated at the request of COFI at the Effective Time.
COFI or any COFI Subsidiary may amend or terminate any Xxxxxxxxxx
Benefit Plan at any time after the Effective Time, provided, that
if the termination or amendment adversely affects the benefits
provided to the Continuing Employees, Charter One Bank or another
COFI Subsidiary shall provide the Continuing Employees with
benefits that are substantially equivalent to the benefits being
received by other similarly situated employees of Charter One Bank
or such other COFI Subsidiary under comparable plans then in
effect, if any. Whenever a Continuing Employee becomes a
participant in an COFI Benefit Plan, such Continuing Employee
shall receive full credit for his past service with Home Bank for
purposes of determining eligibility to participate in and the
vesting benefits of such COFI Benefit Plan (but not for the
purpose of accrual of benefits thereunder). New Employees will
not receive any past service credit. However, both New Employees
and Continuing Employees will not be subject to any exclusion or
penalty for pre-existing conditions that were covered under the
Home Bank health plan immediately prior to the Effective Time or
any waiting period relating to coverage under the COFI health
plan. COFI and Charter One Bank will assume, or will arrange for
a qualified person or entity to assume, the duties of trustee
under the Xxxxxxxxxx employee stock ownership plan as of the
Effective Time, and will assume administrative responsibility for
all employee benefit plans of Xxxxxxxxxx or Home Bank as of the
Effective Time.
5.14 Reservation of Shares to Satisfy Xxxxxxxxxx Stock
-------------------------------------------------
Options. COFI shall take all corporate action necessary to
-------
reserve for issuance a sufficient number of shares of COFI Common
Stock for delivery upon exercise of Xxxxxxxxxx Stock Options
assumed by it in accordance with Section 1.3(g) hereof. As soon
as practicable after the Effective Time, COFI shall file an
appropriate registration statement with respect to the shares of
COFI Common Stock subject to such options and shall use its best
efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so
long as such options remain outstanding.
5.15 Nasdaq Listing. COFI shall use all reasonable
--------------
efforts to cause the shares of COFI Common Stock to be issued in
the Company Merger, and the shares of COFI Common Stock to be
reserved for issuance upon exercise of Xxxxxxxxxx Stock Options,
to be approved for listing on the Nasdaq Stock Market (or such
other national securities exchange or stock market on which the
COFI Common Stock shall then be traded), subject to official
notice of issuance, prior to or as of the Closing.
5.16 Directors' and Officers' Indemnification Insurance.
--------------------------------------------------
COFI agrees that the Merger shall not affect or diminish any of
Xxxxxxxxxx'x or Home Bank's duties and obligations of
indemnification existing immediately prior to the Effective Time
in favor of the directors, officers, employees and agents of
Xxxxxxxxxx or Home Bank arising by virtue of the Articles of
Incorporation, Charter , Code of Regulations or Bylaws of
Xxxxxxxxxx or Home Bank in the form in effect at the date of this
Agreement or arising by operation of law, and such duties and
obligations shall continue in full force and effect for so long as
they would (but for the Merger) otherwise survive and continue in
full force and effect. All provisions for indemnification and
limitation of liability now existing in favor of the employees,
agents, directors or officers of Xxxxxxxxxx, Home Bank or
Xxxxxxxxxx Subsidiaries, as provided by law or regulation or in
their respective Articles of Incorporation or Codes of Regulation
shall survive the Merger, shall be assumed by COFI and shall
continue in full force and effect with respect to acts or
omissions occurring prior to the Effective Time for a period of
three years thereafter or in the case of matters occurring prior
to the Effective Time which have not been resolved prior to the
third anniversary of the Effective Time, until such matters are
finally resolved. COFI or Charter One Bank, respectively, shall
also purchase and keep in force for such three year period
director's and officer's liability insurance and fiduciary
liability insurance to provide coverage for acts or omissions of
the type and in the amount currently covered by Xxxxxxxxxx'x
existing directors and officers liability insurance and fiduciary
liability insurance for acts or omissions occurring prior to the
Effective Time, to the extent such insurance may be purchased or
kept in full force on commercially reasonable terms taking into
account the cost thereof and the benefits provided thereby
(provided that COFI may substitute or cause Xxxxxxxxxx to
substitute therefor single premium tail coverage with policy
limits equal to Home Bank's existing annual coverage limits). To
the extent permitted by law, COFI or Charter One Bank,
respectively, shall advance expenses in connection with the
foregoing indemnification.
5.17 Reports to the SEC. On or after the Effective Time,
------------------
COFI shall continue to file all reports and data with the SEC
necessary to permit stockholders of Xxxxxxxxxx who may be deemed
affiliates of Xxxxxxxxxx within the meaning of Rule 145 under the
Securities Act to sell COFI Common Stock held or received by them
in connection with the Merger pursuant to Rules 144 and 145 under
the Securities Act if they would otherwise be so entitled.
ARTICLE VI
CONDITIONS
6.1 Conditions to the Obligations of COFI, Charter
----------------------------------------------
Michigan and Charter One Bank. Notwithstanding any other
-----------------------------
provision of this Agreement, the obligations of COFI, Charter
Michigan and Charter One Bank to consummate the Merger are subject
to the following conditions precedent (except as to those which
COFI may chose to waive):
(a) subject to the cure provisions set forth in
Section 5.8, all of the representations and warranties made by
Xxxxxxxxxx and Home Bank in this Agreement and in any documents or
certificates provided by Xxxxxxxxxx and Home Bank shall have been
true and correct in all material respects as of the date of this
Agreement and as of the Effective Time as though made on and as of
the Effective Time;
(b) subject to the cure provisions set forth in
Section 5.8, Xxxxxxxxxx and Home Bank shall have performed in all
material respects all obligations and shall have complied in all
material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them prior to
or at the Effective Time;
(c) there shall not have been any action taken or
any statute, rule, regulation or order enacted, promulgated or
issued or deemed applicable to the Merger by any federal or state
government or governmental agency or instrumentality or court,
which would prohibit ownership or operation of all or a portion of
the business or assets of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary
by COFI, Charter Michigan or Charter One Bank, or would compel
COFI, Charter Michigan or Charter One Bank to dispose of all or a
portion of the business or assets of Xxxxxxxxxx or any Xxxxxxxxxx
Subsidiary, as a result of this Agreement, or which would render
any party hereto unable to consummate the transactions
contemplated by this Agreement;
(d) since the date hereof, Xxxxxxxxxx shall not
have suffered a Material Adverse Effect;
(e) no regulatory authority shall impose any non-
standard or unduly burdensome condition relating to the Merger
such that it would substantially deprive COFI of the economic
benefits of the Merger, as determined in the reasonable judgment
of COFI;
(f) COFI shall have received the opinion of Xxxx
Xxxxxx Parks, L.L.P., counsel to Xxxxxxxxxx, in the form of the
attached Exhibit E;
(g) COFI shall have received a certificate signed by
the President and Chief Executive Officer of Xxxxxxxxxx and Home
Bank, dated as of the Effective Time, certifying that based upon
his best knowledge, the conditions set forth in Sections 6.1(a),
(b), and (d) hereof have been satisfied.
(h) simultaneous with the execution and delivery of
this Agreement, the directors of Xxxxxxxxxx who are stockholders
of Xxxxxxxxxx shall have executed and delivered to COFI Voting
Agreements in the form attached hereto as Exhibit A;
(i) COFI shall have received the written affiliates'
agreements described in Section 5.3 hereof; and
(j) Dissenting Shares shall not exceed 7% of the
issued and outstanding Xxxxxxxxxx Common Stock.
6.2 Conditions to the Obligations of Xxxxxxxxxx and Home
----------------------------------------------------
Bank. Notwithstanding any other provision of this Agreement, the
----
obligations of Xxxxxxxxxx and Home Bank to consummate the Merger
are subject to the following conditions precedent (except as to
those which Xxxxxxxxxx may chose to waive):
(a) subject to the cure provisions set forth in
Section 5.8, all of the representations and warranties made by
COFI in this Agreement and in any documents or certificates
provided by COFI shall have been true and correct in all material
respects as of the date of this Agreement and as of the Effective
Time as though made on and as of the Effective Time;
(b) subject to the cure provisions set forth in
Section 5.8, COFI shall have performed in all material respects
all obligations and shall have complied in all material respects
with all agreements and covenants required by this Agreement to be
performed or complied with by it prior to or at the Effective
Time;
(c) there shall not have been any action taken or
any statute, rule, regulation or order enacted, promulgated or
issued or deemed applicable to the Merger by any federal or state
government or governmental agency or instrumentality or record,
which would prohibit ownership or operation of all or a portion of
the business or assets of Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary
by COFI, Charter Michigan or Charter Bank, or which would render
any party hereto unable to consummate the transactions
contemplated by this Agreement;
(d) no regulatory authority shall impose any non-
standard or unduly burdensome condition relating to the Merger,
such that it would substantially deprive Xxxxxxxxxx of the
economic benefits of the Company Merger, as determined in the
reasonable judgment of Xxxxxxxxxx;
(e) since the date hereof, COFI shall not have
suffered a Material Adverse Effect;
(f) Xxxxxxxxxx shall have received the opinion of
Silver, Xxxxxxxx & Xxxx, L.L.P., counsel to COFI, in the form
attached hereto as Exhibit F; and
(g) Xxxxxxxxxx shall have received a certificate
signed by the President and Chief Executive Officer of COFI, dated
as of the Effective Time, that based upon his best knowledge, the
conditions set forth in Sections 6.2(a), (b) and (e) have been
satisfied.
6.3 Conditions to the Obligations of the Parties.
--------------------------------------------
Notwithstanding any other provision of this Agreement, the
obligations of COFI, Charter Michigan and Charter One Bank on the
one hand, and Xxxxxxxxxx and Home Bank on the other hand, to
consummate the Merger are subject to the following conditions
precedent (except as to those which COFI or Xxxxxxxxxx may chose
to waive):
(a) no preliminary or permanent injunction or other
order by any federal or state court which prevents the
consummation of the Merger shall have been issued and shall remain
in effect; nor shall there be any third party proceeding pending
to prevent the consummation of the Merger;
(b) the parties shall have received all applicable
regulatory approvals and consents to consummate the transactions
contemplated in this Agreement and all required waiting periods
shall have expired;
(c) the Registration Statement shall have been
declared effective under the Securities Act and no stop orders
shall be in effect and no proceedings for such purpose shall be
pending or threatened by the SEC and, if the offering for sale of
the COFI Common Stock in the Company Merger pursuant to this
Agreement is subject to the securities laws of any state, the
Registration Statement shall not be subject to a stop order of any
state securities authority;
(d) each party shall have received the tax opinion
addressed to it referred to in Section 5.12 of this Agreement; and
(e) the COFI Common Stock to be issued to holders of
Xxxxxxxxxx Common Stock shall have been approved for listing on
the Nasdaq National Market subject to official notice of issuance.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
7.1 Termination. This Agreement may be terminated at any
-----------
time prior to the Effective Time:
(a) By the mutual written consent of the Boards of
Directors of COFI and Xxxxxxxxxx;
(b) At any time prior to the Effective Time, by COFI
or Xxxxxxxxxx if there shall have been a final judicial or
regulatory determination (as to which all periods for appeal shall
have expired and no appeal shall be pending) that any material
provision of this Agreement is illegal, invalid or unenforceable
(unless the enforcement thereof is waived by the affected party)
or denying any regulatory application the approval of which is a
condition precedent to a party's obligations hereunder;
(c) At any time on or before the date specified in
7.1(f) hereof, by COFI or Xxxxxxxxxx in the event that any of the
conditions precedent to the obligations of the other party to the
Merger are rendered impossible to be satisfied or fulfilled by
said date (other than by reason of a breach by the party seeking
to terminate);
(d) By COFI or Xxxxxxxxxx at any time after the
stockholders of Xxxxxxxxxx fail to approve this Agreement and the
Company Merger by the Required Vote at the Xxxxxxxxxx
Stockholders' Meeting;
(e) By COFI or Xxxxxxxxxx, in the event of a
material breach by the other party of any representation,
warranty, covenant or agreement contained herein or in any
schedule or document delivered pursuant hereto, which breach would
result in the failure to satisfy the closing condition set forth
in Section 6.1(a) or 6.1(b) in the case of COFI, or Section 6.2(a)
or 6.2(b) in the case of Xxxxxxxxxx, and which breach cannot be or
is not cured within thirty (30) days after written notice of such
breach is given by the non-breaching party to the party committing
such breach;
(f) By COFI or Xxxxxxxxxx on or after December 31,
1997, in the event the Company Merger has not been consummated by
such date (provided, however, that the right to terminate under
this Section 7.1(f) shall not be available to any party whose
failure to perform an obligation hereunder has been the cause of,
or has resulted in, the failure of the Company Merger to occur on
or before such date); or
(g) By Xxxxxxxxxx, if the Average COFI Stock Price
is less than $36.55 and both of the following conditions are
satisfied:
(i) written notice of its election to terminate
is delivered by Xxxxxxxxxx to COFI within one business day after
the first date upon which the Average COFI Stock Price can be
determined, and
(ii) COFI, within one business day after its
receipt of such written notice of election to terminate, fails to
agree in writing to an Exchange Ratio determined by dividing the
Average COFI Stock Price into $25.00, which Exchange Ratio shall
be rounded to the fourth decimal place. Nothing herein shall
obligate COFI to adjust the Exchange Ratio and any such action
shall be elective on the part of COFI.
In the event a party elects to effect any termination
pursuant to Section 7.1(b) through 7.1(f) above, it shall give
written notice to the other party hereto specifying the basis for
such termination and certifying that such termination has been
approved by the vote of a majority of the members of its Board of
Directors.
7.2 Liabilities and Remedies; Break-Up Fee.
--------------------------------------
(a) In the event that this Agreement is terminated
by a party (the "Aggrieved Party") solely by reason of the
material breach by the other party ("Breaching Party") of any of
its representations, warranties, covenants or agreements contained
herein then the Aggrieved Party shall be entitled to such remedies
and relief against the Breaching Party as are available at law or
in equity. Moreover, the Aggrieved Party without terminating this
Agreement shall be entitled to specifically enforce the terms
hereof against the Breaching Party in order to cause the Merger to
be consummated. Each party acknowledges that there is not an
adequate remedy at law to compensate the other parties relating to
the non-consummation of the Merger. To this end, each party, to
the extent permitted by law, irrevocably waives any defense it
might have based on the adequacy of a remedy at law which might be
asserted as a bar to specific performance, injunctive relief or
other equitable relief.
(b) In the event that the Xxxxxxxxxx Stockholder's
Meeting does not take place, the Board of Directors of Xxxxxxxxxx
fails to recommend approval of this Agreement and the Company
Merger to the stockholders of Xxxxxxxxxx, or such Board of
Directors shall adversely alter or modify its favorable
recommendation of this Agreement and the Company Merger to the
stockholders of Xxxxxxxxxx, and this Agreement and the Company
Merger is not approved by the stockholders of Xxxxxxxxxx by the
Required Vote, and neither COFI or Charter One Bank is, as of the
date of such event, in material breach of this Agreement, then,
upon termination of this Agreement, Xxxxxxxxxx and Home Bank shall
jointly and severally reimburse COFI and Charter One Bank for
their third party expenses relating to this Agreement and the
transactions contemplated hereby in an amount up to Two Hundred
Thousand Dollars ($200,000) and pay COFI in immediately available
funds an additional amount of Three Million Dollars ($3,000,000)
as an agreed upon break up fee and as the sole and exclusive
remedy of COFI, Merger Sub, Charter Michigan and Charter One Bank.
In order to obtain the benefit of the expense reimbursement and
break-up fees provided in this Section 7.2(b), COFI and Charter
One Bank shall be required to execute a waiver of their rights
under Section 7.2(a) above, and shall not have taken any action to
enforce any right that they might have under Section 7.2(a).
(c) In the event that an Acquisition Proposal occurs
between the date hereof and the time of the Xxxxxxxxxx
Stockholders' Meeting and the stockholders of Xxxxxxxxxx fail to
approve this Agreement and the Company Merger under circumstances
where the Board of Directors of Xxxxxxxxxx continuously maintained
its favorable recommendation of this Agreement and Company Merger,
and neither COFI or Charter One Bank was, as of the date of such
action, in material breach of this Agreement, then if a definitive
agreement relating to an Acquisition Proposal is executed by
Xxxxxxxxxx or any Xxxxxxxxxx Subsidiary, or an Acquisition
Proposal is consummated, in either case within nine months after
the termination of this Agreement, then upon the happening of such
event Xxxxxxxxxx and Home Bank shall be jointly and severally
obligated to pay COFI a cash amount of Three Million Dollars
($3,000,000) as an agreed upon break up fee and as the sole and
exclusive remedy of COFI, Merger Sub, Charter Michigan and Charter
One Bank. Notwithstanding the foregoing, if the average (rounded
down to the nearest whole cent) of the closing sale price of one
share of COFI Common Stock on the Nasdaq National Market for the
20 full trading days ending on the day of the Xxxxxxxxxx
Stockholders' Meeting is less than $36.55, the provisions of this
Section 7.2(c) shall not survive a termination of this Agreement
under Section 7.1(d) hereof. There shall be no duplication of
remedy under this Section 7.2(c) and 7.2(b). In order to obtain
the benefit of the expense reimbursement and break-up fees
provided in this Section 7.2(c), COFI and Charter One Bank shall
be required to execute a waiver of their rights under Section
7.2(a) above, and shall not have taken any action to enforce any
right that they might have under Section 7.2(a).
(d) In the event that all of the conditions
precedent to the consummation of the Merger in Article VI have
been satisfied or would be satisfied by the delivery of documents
which are under the control of COFI and COFI in material breach of
this Agreement refuses to consummate the Company Merger, or if
COFI otherwise willfully abandons the Company Merger in material
breach of this Agreement, then in either case, COFI and Charter
One Bank shall jointly and severally pay Xxxxxxxxxx and Home Bank
liquidated damages in the amount of Three Million Two Hundred
Thousand Dollars ($3,200,000) as their sole and exclusive remedy
against COFI, Merger Sub, Charter Michigan, and Charter One Bank.
In order to pursue the liquidated damage remedy provided in this
subsection, Xxxxxxxxxx and Home Bank shall be required to execute
a waiver of their rights under Section 7.2(a) hereof and shall
have not theretofore taken any action to enforce any right that
they might have under Section 7.2(a) hereof.
7.3 Survival of Agreements. In the event of termination
----------------------
of this Agreement by either COFI or Xxxxxxxxxx as provided in
Section 7.1, this Agreement shall forthwith become void and have
no effect except that the agreements contained in Sections 5.1(b),
5.4, and 7.2 hereof shall survive the termination hereof.
7.4 Amendment. This Agreement may be amended by the
---------
parties hereto by action taken by their respective Boards of
Directors at any time before or after approval hereof by the
stockholders of Xxxxxxxxxx but, after such approval, no amendment
shall be made which changes the form of consideration or the value
of the consideration to be received by the stockholders of
Xxxxxxxxxx without the approval of the stockholders of Xxxxxxxxxx.
This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto. The
parties may, without approval of their respective Boards of
Directors, make such technical changes to this Agreement, not
inconsistent with the purposes hereof as may be required to effect
or facilitate any regulatory approval or acceptance of the Merger
or of this Agreement or to effect or facilitate any regulatory or
governmental filing or recording required for the consummation of
any of the transactions contemplated hereby.
7.5 Waiver. Any term, provision or condition of this
------
Agreement (other than the requirement of Xxxxxxxxxx stockholder
approval) may be waived in writing at any time by the party which
is entitled to the benefits hereof. Each and every right granted
to any party hereunder, or under any other document delivered in
connection herewith or therewith, and each and every right allowed
it by law or equity, shall be cumulative and may be exercised from
time to time. The failure of a party at any time or times to
require performance of any provision hereof shall in no manner
affect such party's right at a later time to enforce the same. No
waiver by any party of a condition or of the breach of any term,
covenant, representation or warranty contained in this Agreement,
whether by conduct or otherwise, in any one or more instances
shall be deemed to be or construed as a further or continuing
waiver of any such condition or breach or a waiver of any other
condition or of the breach of any other term, covenant,
representation or warranty of this Agreement. No investigation,
review or audit by a party of another party prior to or after the
date hereof shall estop or prevent such party from exercising any
right hereunder or be deemed to be a waiver of any such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Survival. All representations, warranties, covenants
--------
and agreements of the parties in this Agreement or in any
instrument delivered by the parties pursuant to this Agreement
(other than the agreements, covenants and obligations set forth
herein which are contemplated to be performed after the Effective
Time) shall not survive the Effective Time, provided that no such
representations, warranties or covenants shall be deemed to be
terminated or extinguished so as to deprive any party (or any of
its directors, officers, employees or agents) of any defense in
law or equity which otherwise would be available against the
claims of any person, including, without limitation, any
stockholder or former stockholder of either COFI or Xxxxxxxxxx,
the aforesaid representations, warranties, and covenants being
material inducements to consummation by the parties and the
surviving corporation and resulting institution of the
transactions contemplated hereby.
8.2 Notices. All notices and other communications
-------
hereunder shall be in writing and shall be deemed given if
delivered personally, by facsimile transmission or by registered
or certified mail to the parties at the following addresses (or at
such other address for a party as shall be specified by like
notice) and shall be deemed to be delivered on the date so
delivered:
(a) if to COFI, Charter Michigan or Charter One
Bank:
Xx. Xxxxxxx X. Xxxx
Chief Executive Officer
Charter One Financial, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
copy to:
Xx. Xxxxxx X. Xxxx
Chief Corporate Counsel
Charter One Financial, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and
Xxxxx X. Xxxx, Esq.
Silver, Xxxxxxxx & Xxxx L.L.P.
ll00 Xxx Xxxx Xxx., X.X.
Xxxxxxxxxx, X.X. 00000
(b) if to Xxxxxxxxxx or Home Bank:
Xx. Xxxxxxx X. Valerian
President
Xxxxxxxxxx Corporation
00 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
copy to:
F. Xxxxxx X'Xxxxx, Esq.
Xxxx Xxxxxx Parks L.L.P.
000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
8.3 Applicable Law. This Agreement shall be construed
--------------
and interpreted according to the laws of the State of Ohio without
regard to conflicts of laws principles thereof, except to the
extent that the federal laws of the United States apply.
8.4 Headings, Etc. The article headings and section
-------------
headings contained in this Agreement are inserted for convenience
only and shall not affect in any way the meaning or interpretation
of this Agreement.
8.5 Severability. If any term, provision, covenant, or
------------
restriction contained in this Agreement is held by a final and
unappealable order of a court of competent jurisdiction to be
invalid, void, or unenforceable, then the remainder of the terms,
provisions, covenants, and restrictions contained in this
Agreement shall remain in full force and effect, and shall in no
way be affected, impaired, or invalidated unless the effect would
be to cause this Agreement to not achieve its essential purposes.
8.6 Entire Agreement; Binding Effect; Non-Assignment;
------------------------------------------------
Counterparts. Except as otherwise expressly provided herein, this
------------
Agreement (including the documents and instruments referred to
herein) (a) constitutes the entire agreement between the parties
hereto and supersedes all other prior agreements and undertakings,
both written and oral, between the parties, with respect to the
subject matter hereof; and (b) is not intended to confer upon any
other person any rights or remedies hereunder except as
specifically provided herein. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and
their respective successors. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned
by any party hereto without the prior written consent of the other
party hereto. This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
8.7 No Employment Solicitation. Prior to the receipt of
--------------------------
OTS approval of the Merger, COFI and the COFI Subsidiaries shall
not knowingly, actively solicit the employment of any current
director, officer or full time employee of Xxxxxxxxxx or the
Xxxxxxxxxx Subsidiaries.
8.8 Additional Party. Upon the formation of Merger Sub,
----------------
COFI shall cause Merger Sub to take all necessary corporate action
to approve this Agreement and to become a party hereto for
purposes of consummating the Company Merger.
The undersigned have caused this Agreement to be executed as
of the day and year first above written.
CHARTER ONE FINANCIAL, INC.
By ______________________________
Authorized Officer
CHARTER MICHIGAN BANCORP, INC.
By ______________________________
Authorized Officer
CHARTER ONE BANK F.S.B.
By ______________________________
Authorized Officer
XXXXXXXXXX CORPORATION
By ______________________________
Authorized Officer
HOME BANK, F.S.B.
By ______________________________
Authorized Officer
