AGREEMENT AND PLAN OF MERGER
dated as of September 23, 1995
by and among
REPUBLIC NEW YORK CORPORATION
LRNY INCORPORATED
and
BROOKLYN BANCORP, INC.
PAGE
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I. THE MERGER
Section 1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Effective Time . . . . . . . . . . . . . . . . . . . . . 3
Section 1.4. Certificate . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.5. By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.6. Officers and Directors . . . . . . . . . . . . . . . . . 3
Section 1.7. Alternative Structure . . . . . . . . . . . . . . . . . . 3
ARTICLE II. EFFECT OF THE MERGER ON OUTSTANDING SHARES
Section 2.1. Conversion or Cancellation of Shares . . . . . . . . . . 4
Section 2.2. Merger Consideration . . . . . . . . . . . . . . . . . . 5
Section 2.3. Payment for Shares . . . . . . . . . . . . . . . . . . . 5
Section 2.4. Dissenters' Shares . . . . . . . . . . . . . . . . . . . 6
Section 2.5. Transfer of Shares After the Effective
Time . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.6. Warrants, Options and SARs . . . . . . . . . . . . . . . 7
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Section 3.1. Disclosure Letters . . . . . . . . . . . . . . . . . . . 7
Section 3.2. Standards . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.3. Representations and Warranties of the
Company . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.4. Representations and Warranties of the Acquiror . . . . . 28
ARTICLE IV. CONDUCT PENDING THE MERGER
Section 4.1. Conduct of the Company's Business Prior
to the Effective Time . . . . . . . . . . . . . . . 30
Section 4.2. Forbearance by the Company . . . . . . . . . . . . . . . 31
Section 4.3. Cooperation . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE V. COVENANTS
Section 5.1. Acquisition Proposals . . . . . . . . . . . . . . . . . . 35
Section 5.2. Certain Policies of the Company . . . . . . . . . . . . . 36
Section 5.3. Employees . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.4. Access and Information . . . . . . . . . . . . . . . . . 39
Section 5.5. Certain Filings, Consents and
Arrangements . . . . . . . . . . . . . . . . . . . 40
Section 5.6. Takeover Laws . . . . . . . . . . . . . . . . . . . . . . 40
Section 5.7. Indemnification; Directors' and Officers' Insurance . . . 40
ii
Section 5.8. Publicity . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 5.9. Proxy Statement . . . . . . . . . . . . . . . . . . . . . 42
Section 5.10. Shareholders' Meeting . . . . . . . . . . . . . . . . . . 43
Section 5.11. Notification of Certain Matters . . . . . . . . . . . . . 43
Section 5.12. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 44
Section 5.13. Assistance Agreement . . . . . . . . . . . . . . . . . . 44
Section 5.14. Advisory Board . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI. CONDITIONS TO CONSUMMATION
Section 6.1. Conditions to All Parties' Obligations . . . . . . . . . 45
Section 6.2. Conditions to the Obligations of the
Acquiror . . . . . . . . . . . . . . . . . . . . . 47
Section 6.3. Conditions to the Obligation of the
Company . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VII. TERMINATION
Section 7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.2. Effect of Termination . . . . . . . . . . . . . . . . . . 50
ARTICLE VIII. OTHER MATTERS
Section 8.1. Interpretation . . . . . . . . . . . . . . . . . . . . . 50
Section 8.2. Survival . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.3. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.4. Counterparts . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.5. Governing Law . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.6. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.8. Entire Agreement; Etc. . . . . . . . . . . . . . . . . . 52
Section 8.9. Assignment . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8.10. Captions . . . . . . . . . . . . . . . . . . . . . . . . 52
iii
LIST OF ANNEXES
Annex 1 - Form of Stock Option Agreement (Recital C)
Annex 2 - Form of FDIC Letter (Recital E)
iv
INDEX OF DEFINED TERMS
Location of
Term Definition
Acquiror Bank . . . . . . . . . . . . . . . . . . . . . . . Recital D
Acquiror . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Acquisition Proposal . . . . . . . . . . . . . . . . . . . 5.1
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Assistance Agreement . . . . . . . . . . . . . . . . . . . Recital E
Bank Merger . . . . . . . . . . . . . . . . . . . . . . . . Recital D
BHC Act . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(f)
Certificate of Merger . . . . . . . . . . . . . . . . . . . 1.3
Certificate . . . . . . . . . . . . . . . . . . . . . . . . 1.4
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . 1.2
Company Subsidiaries . . . . . . . . . . . . . . . . . . . 3.3(d)
Company Bank . . . . . . . . . . . . . . . . . . . . . . . Recital D
Company . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7(a)
Covered Person . . . . . . . . . . . . . . . . . . . . . . 3.3(y)
Derivatives Contract . . . . . . . . . . . . . . . . . . . 3.3(w)
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Disclosure Letter . . . . . . . . . . . . . . . . . . . . . 3.1
Disposition Period . . . . . . . . . . . . . . . . . . . . 4.1(b)
Dissenters' Shares . . . . . . . . . . . . . . . . . . . . 2.1(a)
Dissenting Stockholder . . . . . . . . . . . . . . . . . . 2.1(a)
Effective Time . . . . . . . . . . . . . . . . . . . . . . 1.3
Employee . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Employee Agreements . . . . . . . . . . . . . . . . . . . . 3.3(n)
Environmental Law . . . . . . . . . . . . . . . . . . . . . 3.3(r)
ERISA Affiliates . . . . . . . . . . . . . . . . . . . . . 3.3(n)
ERISA Affiliate Agreement . . . . . . . . . . . . . . . . . 3.3(n)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(n)
Excluded Shares . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
FDIA . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(f)
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital B
FDIC Contracts . . . . . . . . . . . . . . . . . . . . . . 3.3(z)
FDIC Letter . . . . . . . . . . . . . . . . . . . . . . . . Recital E
FDIC Payments . . . . . . . . . . . . . . . . . . . . . . . Recital E
FHLB . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(d)
FRB . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(f)
Hazardous Material . . . . . . . . . . . . . . . . . . . . 3.3(r)
HOLA . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital B
Indemnified Parties . . . . . . . . . . . . . . . . . . . . 5.7(a)
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(n)
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(f)
Loan Property . . . . . . . . . . . . . . . . . . . . . . . 3.3(r)
Material Adverse Effect . . . . . . . . . . . . . . . . . . 3.2(b)
v
Maximum Amount . . . . . . . . . . . . . . . . . . . . . . 5.7(c)
Merger Consideration . . . . . . . . . . . . . . . . . . . 2.2
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Option Agreement . . . . . . . . . . . . . . . . . . . . . Recital C
Option . . . . . . . . . . . . . . . . . . . . . . . . . . Recital C
OREO . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(s)
OTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(f)
Participation Facility . . . . . . . . . . . . . . . . . . 3.3(r)
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 2.3
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(n)
Pension Agreement . . . . . . . . . . . . . . . . . . . . . 3.3(n)
Proxy Statement . . . . . . . . . . . . . . . . . . . . . 5.9
Qualified Agreement . . . . . . . . . . . . . . . . . . . . 3.3(n)
Regulatory Agencies . . . . . . . . . . . . . . . . . . . . 3.3(g)
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(g)
Requisite Regulatory Approvals . . . . . . . . . . . . . . 3.3(f)
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(b)
SAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3(g)
Shared-Loss Assets . . . . . . . . . . . . . . . . . . . . Recital E
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . Recital B
State Regulator . . . . . . . . . . . . . . . . . . . . . . 3.3(g)
Surviving Corporation . . . . . . . . . . . . . . . . . . . 1.1
Takeover Law . . . . . . . . . . . . . . . . . . . . . . . 3.3(t)
1
AGREEMENT AND PLAN OF MERGER, dated as of September 23, 1995
(this "Agreement"), by and among Republic New York Corporation (the
"Acquiror"), LRNY Incorporated ("Merger Sub") and Brooklyn Bancorp, Inc.
(the "Company").
RECITALS
A. The Acquiror and Merger Sub. The Acquiror has been duly
incorporated and is an existing corporation in good standing under the laws
of the State of Maryland, with its principal executive offices located in
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx. Merger Sub has been duly
incorporated as a wholly owned subsidiary of the Acquiror and is an
existing corporation in good standing under the laws of the State of
Delaware.
B. The Company. The Company has been duly incorporated and is
an existing corporation in good standing under the laws of the State of
Delaware, with its principal executive offices located in 000 Xxxxxxxx
Xxxxxx, Xxxxxxxx, Xxx Xxxx. As of the date hereof, the Company has
40,000,000 authorized shares of common stock, par value $0.01 per share
("Shares"), of which, 12,003,998 shares are outstanding, 870,000 shares are
reserved for issuance pursuant to the Company's stock option plans and
1,000,000 shares are reserved for issuance pursuant to warrants held by the
Federal Deposit Insurance Corporation ("FDIC"), and 10,000,000 authorized
shares of preferred stock, par value $0.01 per share, none of which are
outstanding (no other class of capital stock being authorized and no other
shares of capital stock being reserved for issuance). The Company is a
savings and loan holding company duly registered under the Home Owners'
Loan Act of 1933, as amended ("HOLA").
C. The Option Agreement. As an inducement and a condition to
the willingness of the Acquiror and Merger Sub to enter into this
Agreement, the Company will enter into a Stock Option Agreement with the
Acquiror in the form set forth in Annex 1 (the "Option Agreement"),
pursuant to which the Company will grant to the Acquiror an option (the
"Option") to purchase authorized but unissued Shares representing 19.9% of
the outstanding Shares, upon the terms and conditions therein contained.
D. The Bank Merger. It is the intention of the parties that,
unless otherwise determined pursuant to Section 1.7 hereof, following the
Effective Time (as defined in Section 1.3), XxxxxXxxx Federal Savings Bank,
a federal savings bank and a wholly owned subsidiary of the Company (the
"Company Bank"), will merge (the "Bank Merger") with
2
and into a wholly owned subsidiary of the Acquiror (the "Acquiror Bank").
E. The Assistance Agreement. The Company Bank is a party to
an Amended and Restated Assistance Agreement dated as of August 9, 1993
between the Federal Deposit Insurance Corporation, in its corporate
capacity (the "FDIC"), and the Company Bank, as amended by Amendment No. 1
thereto dated as of June 30, 1994, Amendment No. 2 thereto dated as of June
13, 1995, the letter to the Company Bank dated October 12, 1993 from the
FDIC, in its corporate capacity and as conservator for the Company Bank,
and the letter dated September 22, 1995 from the FDIC to the Company (as so
amended, the "Assistance Agreement"). Pursuant to the Assistance
Agreement, and subject to the terms and conditions thereof, the Company
Bank is entitled to receive from the FDIC certain amounts ("FDIC Payments")
in connection with losses and expenses incurred in relation to certain
assets of the Company Bank and its subsidiaries (as defined in the
Assistance Agreement, "Shared-Loss Assets"). As a condition of the
consummation of the transactions contemplated hereby, prior to the
Effective Time the Company shall receive a letter from the FDIC
substantially in the form of Annex 2 (the "FDIC Letter").
NOW, THEREFORE, in consideration of their mutual promises and
obligations hereunder, the parties agree as follows:
ARTICLE I. THE MERGER
Section 1.1. The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time (as defined below), Merger Sub
shall be merged with and into the Company and the separate corporate
existence of Merger Sub shall thereupon cease (the "Merger"). The Company
shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue to be
governed by the laws of the State of Delaware, and the separate corporate
existence of the Company with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger, except as
set forth in Sections 1.4 and 1.5. The Merger shall have the effects
specified in the Delaware General Corporation Law (the "DGCL").
Section 1.2. Closing. The closing of the Merger (the
"Closing") shall take place (i) at the offices of Xxxxxxxx & Xxxxxxxx,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx on a business day selected by the
Acquiror which is not more than 10 business days after the date on which
the last to be
3
fulfilled or waived of the conditions set forth in Article VI hereof shall
be fulfilled or waived in accordance with this Agreement or (ii) at such
other place and time and/or on such other date as the Company and the
Acquiror may mutually agree. The date of the Closing is referred to herein
as the "Closing Date".
Section 1.3. Effective Time. As soon as practicable following
the Closing, and provided that this Agreement has not been terminated or
abandoned pursuant to Article VII hereof, the Company and the Acquiror will
cause a Certificate of Merger (the "Certificate of Merger") to be executed
and filed with the Secretary of State of Delaware as provided in
Section 251 of the DGCL. The Merger shall become effective at the time on
which the Certificate of Merger has been duly filed with the Secretary of
State of Delaware, and such time is hereinafter referred to as the
"Effective Time."
Section 1.4. Certificate. The Certificate of Incorporation of
the Merger Sub (the "Certificate") in effect at the Effective Time shall be
the Certificate of Incorporation of the Surviving Corporation, until duly
amended in accordance with the terms thereof and the DGCL.
Section 1.5. By-Laws. The By-Laws of Merger Sub in effect at
the Effective Time shall be the By-Laws of the Surviving Corporation, until
duly amended in accordance with the terms thereof and the DGCL.
Section 1.6. Officers and Directors. The directors and
officers of Merger Sub at the Effective Time shall, from and after the
Effective Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-Laws.
Section 1.7. Alternative Structure. Notwithstanding anything
in this Agreement to the contrary, the Acquiror may specify that, before
the Merger, the Company, the Acquiror, the Company Bank, the Acquiror Bank
and any other subsidiary or affiliate of the Acquiror shall enter into
transactions other than those described in this Article I necessary in
order to effect the intent of this Agreement, and the Company and the
Acquiror shall take all action necessary and appropriate to effect, or
cause to be effected, such transactions; provided, however, that no such
specification may in the reasonable judgment of the Company materially and
adversely affect the timing of the
4
consummation of the Merger or adversely affect the tax effect or economic
benefits of the Merger to the holders of Shares.
ARTICLE II. EFFECT OF THE MERGER ON OUTSTANDING SHARES
Section 2.1. Conversion or Cancellation of Shares. The manner
of converting or cancelling shares of the Company and Merger Sub in the
Merger shall be as follows:
(a) At the Effective Time, each Share issued and outstanding
immediately prior to the Effective Time, other than Excluded Shares
(as defined below), shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right
to receive, without interest, an amount in cash equal to the Merger
Consideration (as defined in Section 2.2). All such Shares, by
virtue of the Merger and without any action on the part of the
holders thereof, shall no longer be outstanding and shall be canceled
and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall thereafter cease to
have any rights with respect to such Shares, except the right to
receive the Merger Consideration for such Shares, upon the surrender
of such certificate in accordance with Section 2.2 or the right, if
any, to receive payment from the Surviving Corporation of the "fair
value" of such Shares as determined in accordance with Section 262 of
the DGCL. "Excluded Shares" means (i) Shares the holder of which (a
"Dissenting Stockholder") is entitled to receive payment in
accordance with Section 262 of the DGCL ("Dissenters' Shares") and
(ii) Shares held directly or indirectly by the Acquiror, other than
Shares (a) held in trust, managed, custodial or nominee accounts,
(b) held by investment companies for which an affiliate of the
Acquiror acts as investment adviser or (c) held in satisfaction of a
debt previously contracted.
(b) At the Effective Time, each Excluded Share issued and
outstanding at the Effective Time, and each Share issued and held in
the Company's treasury at the Effective Time, shall, by virtue of the
Merger and without any action on the part of the holder thereof,
cease to be outstanding, shall be canceled and retired without
payment of any consideration therefor and shall cease to exist.
5
(c) At the Effective Time, each share of Common Stock, par
value $5.00 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Merger Sub or the
holders of such shares, be converted into one Share.
Section 2.2. Merger Consideration. The "Merger Consideration"
shall equal $41.50 per Share.
Section 2.3. Payment for Shares. As of the Effective Time,
the Acquiror shall make available or cause to be made available to the
paying agent appointed by the Acquiror (which may be a subsidiary of the
Acquiror) (the "Paying Agent") amounts sufficient in the aggregate to
provide all funds necessary for the Paying Agent to make payments pursuant
to Section 2.1(a) to holders of Shares issued and outstanding immediately
prior to the Effective Time. Promptly after the Effective Time, the
Acquiror shall cause to be mailed to each person who was, immediately prior
to the Effective Time, a holder of record of issued and outstanding Shares
a form of letter of transmittal and instructions for use in effecting the
surrender of the certificates which, immediately prior to the Effective
Time, represented any of such Shares in exchange for payment therefor.
Upon surrender to the Paying Agent of such certificates, together with such
letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the Acquiror shall promptly cause to be paid to the
persons entitled thereto a check in the amount to which such persons are
entitled, after giving effect to any required tax withholdings. If all
required documentation is received by the Paying Agent within sixty days
after the Effective Time, the Acquiror shall direct the Paying Agent to
make payment of the Merger Consideration with respect to the Shares so
surrendered within five business days of the receipt of all required
documentation in proper form. If all required documentation is not
received by the Paying Agent within sixty days after the Effective Time,
the Acquiror shall direct the Paying Agent to make payment of the Merger
Consideration with respect to the Shares so surrendered with reasonable
promptness after receipt of all required documentation in proper form. No
interest will be paid or will accrue on the amount payable upon the
surrender of any such certificate. If payment is to be made to a person
other than the registered holder of the certificate surrendered, it shall
be a condition of such payment that the certificate so surrendered shall be
properly endorsed or otherwise in proper form for transfer and that the
person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other
6
than the registered holder of the certificate surrendered or establish to
the satisfaction of the Acquiror or the Paying Agent that such tax has been
paid or is not applicable. One hundred and eighty days following the
Effective Time, the Acquiror shall be entitled to cause the Paying Agent to
deliver to it any funds (including any interest received with respect
thereto) made available to the Paying Agent which have not been disbursed
to holders of certificates formerly representing Shares that were
outstanding immediately prior to the Effective Time, and thereafter such
holders shall be entitled to look to the Acquiror only as general creditors
thereof with respect to the cash payable upon due surrender of their
certificates. Notwithstanding the foregoing, neither the Paying Agent nor
any party hereto shall be liable to any holder of certificates formerly
representing Shares for any amount paid to a public official pursuant to
any applicable abandoned property, escheat or similar law. In the event
any certificate shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such certificate to be
lost, stolen or destroyed and, if required by the Paying Agent, the posting
by such person of a bond in such amount as the Paying Agent may direct as
indemnity against any claim that may be made against it with respect to
such certificate, the Paying Agent will issue in exchange for such lost,
stolen or destroyed certificate the Merger Consideration deliverable in
respect thereof pursuant to this Agreement.
Section 2.4. Dissenters' Shares. If any Dissenting
Stockholder shall be entitled to be paid the "fair value" of his or her
Shares, as provided in Section 262 of the DGCL, the Company shall give the
Acquiror notice thereof and the Acquiror shall have the right to
participate in all negotiations and proceedings with respect to any such
demands. Neither the Company nor the Surviving Corporation shall, except
with the prior written consent of the Acquiror, voluntarily make any
payment with respect to, or settle or offer to settle, any such demand for
payment. If any Dissenting Stockholder shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Shares held by such
Dissenting Stockholder shall thereupon be treated as though such Shares had
been converted into the right to receive the Merger Consideration pursuant
to Section 2.1.
Section 2.5. Transfer of Shares After the Effective Time. No
transfers of Shares shall be made on the stock transfer books of the
Surviving Corporation at or after the Effective Time.
7
Section 2.6. Warrants, Options and SARs. At the Effective
Time, each warrant and each option and related stock appreciation right or
limited stock appreciation right (as the case may be, an "SAR") granted by
the Company to purchase Shares or receive other consideration, which is
outstanding and unexercised immediately prior to the Effective Time
(whether such options are vested or not vested and whether or not such
options are otherwise exercisable), shall be terminated and the grantee
thereof shall be entitled to receive, in lieu of each Share or any other
consideration that would otherwise have been issuable upon exercise
thereof, an amount in cash computed by multiplying (i) the excess, if any,
of (x) the Merger Consideration over (y) the per Share exercise price
applicable to such warrant or option by (ii) the number of Shares subject
to such warrant or option. The Company agrees to take or cause to be taken
all action necessary under such warrants, options and related SARs to
provide for such termination and payment, including obtaining any necessary
consents from grantees. The failure to obtain any grantee consent shall
not prevent the termination and payment described herein. Within five
business days after the Effective Time, the Acquiror will make the payments
required to be made to grantees of warrants, options and related SARs under
this Section 2.6. All payments under this Section 2.6 shall be reduced by
the amount of any applicable withholding taxes.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Section 3.1. Disclosure Letters. On or prior to the date
hereof, the Company has delivered to the Acquiror a letter (its "Disclosure
Letter") setting forth, among other things, facts, circumstances and events
the disclosure of which is required or appropriate in relation to any or
all of its representations and warranties (and making specific reference to
the Section of this Agreement to which they relate), other than Section
3.3(h)(iii); provided that (a) no such fact, circumstance or event is
required to be set forth in a Disclosure Letter as an exception to a
representation or warranty (it being understood that items to be set forth
in response to Sections 3.3(d)(the first sentence only), 3.3(j), 3.3(n)(i),
3.3(s)(ii), 3.3(w)(i) and (ii), 3.3(z), 3.3(aa) or 3.3(ab) are intended as
informational disclosures and not to constitute exceptions to the
applicable representation or warranty) if its absence is not reasonably
likely to result in the related representation or warranty being deemed
untrue or incorrect under the standards established by Section 3.2, and
(b) the mere inclusion of a fact, circumstance or event in a Disclosure
8
Letter shall not be deemed an admission by a party that such item
represents a material exception or that such item is reasonably likely to
result in a Material Adverse Effect (as defined in Section 3.2).
Section 3.2. Standards. (a) No representation or warranty of
Company or Acquiror contained in Section 3.3 or 3.4, respectively, shall be
deemed untrue or incorrect, and no party hereto shall be deemed to have
breached a representation or warranty, on account of the existence of any
fact, circumstance or event unless, as a direct or indirect consequence of
such fact, circumstance or event, individually or taken together with all
other facts, circumstances or events inconsistent with any paragraph of
Section 3.3 or 3.4, as applicable, there is reasonably likely to exist a
Material Adverse Effect. The Company's representations, warranties and
covenants contained in this Agreement shall not be deemed to be untrue or
breached as a result of effects arising solely from actions taken in
compliance with a written request of the Acquiror.
(b) As used in this Agreement, the term "Material Adverse
Effect" means either (i) an effect which (A) is material and adverse to the
business, financial condition, results of operations or prospects of the
Company or the Acquiror, as the context may dictate, and its subsidiaries
taken as a whole, or (B) adversely affects the ability of the Company or
the Acquiror, as the context may dictate, to perform its material obli-
gations hereunder or (C) materially and adversely affects the timely
consummation of the transactions contemplated hereby or (ii) the failure of
(x) a representation or warranty contained in Section 3.3(a), 3.3(b),
3.3(d) (but only the first sentence and only with respect to the Company
Bank), 3.3(e), 3.3(h)(iii), 3.4(a), 3.4(c) or 3.4(e) to be true and correct
or (y) a representation or warranty contained in the last sentence of
Section 3.3(f), Section 3.3(h)(i) or (ii), 3.3(u), 3.3(x), 3.3(z), 3.3(aa)
or 3.3(ab), to be true and correct in all material respects.
Section 3.3. Representations and Warranties of the Company.
Subject to Sections 3.1 and 3.2 and except as set forth in the Disclosure
Letter relating to the Company referred to therein, the Company represents
and warrants to the Acquiror that:
(a) Recital True. The facts set forth in Recital B of this
Agreement are true and correct.
(b) Capital Stock. All outstanding shares of capital stock
of the Company and the Company Bank, are
9
duly authorized, validly issued and outstanding, fully paid and non-
assessable, and subject to no preemptive or registration rights.
Other than as disclosed in Section 3.3(b) of the Company's Disclosure
Letter, there are no outstanding warrants, options, stock
appreciation rights or other rights, contingent or otherwise, to
purchase or otherwise acquire shares of capital stock of the Company
or any Company Subsidiary, nor are there any commitments to issue any
such warrants, options, stock appreciation rights or other rights
(all of the foregoing warrants, options, rights or commitments being,
"Rights").
(c) Qualification. Each of the Company and the Company Sub-
sidiaries has the requisite power and authority, and is duly
qualified in all jurisdictions where such qualification is required,
to carry on its business as it is now being conducted and to own all
its properties and assets, and it has all federal, state, local, and
foreign governmental authorizations necessary for it to own or lease
its properties and assets and to carry on its business as it is now
being conducted.
(d) Company Subsidiaries; Significant Investments. Section
3.3(d) of the Company's Disclosure Letter lists (i) all direct and
indirect subsidiaries of the Company (collectively, the "Company
Subsidiaries"), (ii) the jurisdiction of incorporation of each
Company Subsidiary and (iii) the states in which each Company
Subsidiary is qualified to do business. The shares of capital stock
of all of the Company Subsidiaries are duly authorized, fully paid,
nonassessable, subject to no preemptive or registration rights and
owned directly and of record by the Company or a Company Subsidiary
free and clear of all liens, claims, encumbrances and restrictions on
transfer and there are no Rights with respect to such capital stock.
None of the Company or any of the Company Subsidiaries owns any
equity securities, any security convertible or exchangeable into an
equity security or any rights to acquire any equity security, except
for (w) equity securities of a Company Subsidiary, (x) the 141,823
shares of capital stock, par value $100 per share, of the Federal
Home Loan Bank of New York (the "FHLB"), (y) 330,350 shares of
preferred stock of the Federal Home Loan Mortgage Corporation and (z)
except as disclosed in Section 3.3(d) of the Company's Disclosure
Letter.
10
(e) Authority and Shareholder Approvals. The Company has the
requisite corporate authority and power to execute and deliver, and
to perform its obligations under, this Agreement and the Option
Agreement. Subject to the receipt of required shareholder approval
of this Agreement by the holders of a majority of the outstanding
Shares, this Agreement has been, and the Option Agreement has been,
authorized by all necessary corporate action of the Company. This
Agreement is, and upon its execution and delivery the Option
Agreement will be, a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms subject
as to enforcement to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(f) No Violations. The execution, delivery and performance
of this Agreement by the Company do not, the execution, delivery and
performance of the Option Agreement by the Company will not, and the
consummation of the transactions contemplated hereby or thereby by
the Company will not, constitute (i) assuming receipt of all
requisite regulatory and shareholder approvals, a breach or violation
of, or a default under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement,
indenture or instrument of the Company or any subsidiary of the
Company or to which the Company or any of the Company Subsidiaries
(or any of their respective properties) is subject, (ii) a breach or
violation of, or a default under, the certificate of incorporation or
by-laws or similar organizational documents of the Company or any
subsidiary of the Company or (iii) a breach or violation of, or a
default under (or an event which with due notice or lapse of time or
both would constitute a default under), or result in the termination
of, accelerate the performance required by, or result in the creation
of any lien, pledge, security interest, charge or other encumbrance
("Liens") upon any of the properties or assets of the Company or any
subsidiary of the Company under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust, loan
agreement or other agreement, instrument or obligation to which the
Company or any subsidiary of the Company is a party, or to which any
of their respective properties or assets may be subject; and the
consummation of the transactions (including the Bank Merger) con-
templated hereby (exclusive of the effect of any changes effected
11
pursuant to Section 1.7) and by the Option Agreement will not require
any approval, consent or waiver under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or the
approval, consent or waiver of any other party to any such agreement,
indenture or instrument, other than (i) the approval of the holders
of a majority of the outstanding Shares, (ii) the approvals of the
Office of Thrift Supervision (the "OTS") under Section 10 of HOLA and
12 C.F.R. Parts 552, 563b, 574 and any other requirement of the OTS,
the approval of the Board of Governors of the Federal Reserve System
(the "FRB") under Section 4 of the Bank Holding Company Act of 1956
(the "BHC Act") (or the receipt of a waiver under 12 C.F.R.
sec.225.12(d)), the approval of the appropriate regulatory authority
under Section 18 of the Federal Deposit Insurance Act, as amended
(the "FDIA") and the approval of the Superintendent of Banks of the
State of New York under Section 601 of the New York Banking Law
(collectively, the "Requisite Regulatory Approvals"), and (iii) such
approvals, consents or waivers as are required under the federal and
state securities or "Blue Sky" laws in connection with the
transactions contemplated by this Agreement or the Option Agreement.
As of the date hereof, the executive officers of the Company know of
no reason pertaining to the Company why any of the approvals referred
to in this Section 3.3(f) should not be obtained without the
imposition of any material condition or restriction.
(g) Reports. (i) As of their respective dates, neither the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, nor any other document filed subsequent to
December 31, 1994 (including the Company's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1995 and June 30, 1995)
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended (including the rules and regulations
thereunder, the "Securities Exchange Act"), each in the form
(including exhibits) filed with the Securities and Exchange
Commission (the "SEC"), or any of the reports or other statements
filed by the Company or the Company Bank on or subsequent to
December 31, 1994 with the OTS or otherwise pursuant to
12 C.F.R. Parts 563b, 563d or 563g (collectively with the above-
referenced reports filed under the Securities Exchange Act, the
"Reports"), contained or will contain any untrue statement of a
material fact or omitted or will omit to state a material fact
required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they
12
were made, not misleading. Each of the consolidated statements of
condition contained or incorporated by reference in the Reports
(including in each case any related notes and schedules) fairly
presented or will fairly present, as the case may be, the financial
position of the entity or entities to which it relates as of its date
and each of the consolidated statements of operations, consolidated
statements of cash flows and consolidated statements of changes in
stockholders' equity, contained or incorporated by reference in its
Reports (including in each case any related notes and schedules),
fairly presented or will fairly present, as the case may be, the
results of operations, stockholders' equity and cash flows, as the
case may be, of the entity or entities to which it relates for the
periods set forth therein (subject, in the case of unaudited interim
statements, to normal year-end audit adjustments that are not
material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied during
the periods involved, except as may be noted therein.
(ii) The Company and each of the Company Subsidiaries have
each timely filed all reports, registrations and statements, together
with any amendments required to be made with respect thereto, that
they were required to file since December 31, 1992 with (i) the SEC,
(ii) the OTS, (iii) the FDIC, (iv) the FHLB and (v) any state banking
commission or other regulatory authority ("State Regulator") (collec-
tively, the "Regulatory Agencies"), and all other reports and
statements required to be filed by them since December 31, 1992,
including any report or statement required to be filed pursuant to
the laws, rules or regulations of the United States, the OTS, the
FDIC, the FHLB and any State Regulator, and have paid all fees and
assessments due and payable in connection therewith.
(h) Absence of Certain Changes or Events. Except as
disclosed in the Company's Reports filed prior to the date of this
Agreement, true and complete copies of which have been provided by
the Company to the Acquiror, since December 31, 1994, (i) the Company
and the Company Subsidiaries have not incurred any liability, except
in the ordinary course of their business consistent with past
practice, (ii) the Company and the Company Subsidiaries have
conducted their respective businesses only in the ordinary and usual
course of such businesses and (iii) there has not been any Material
Adverse Effect.
13
(i) Taxes. All federal, state, local, and foreign tax
returns due on or after December 31, 1992, including any information
returns, employment tax returns, statements, forms and reports
required to be filed by or on behalf of the Company or any of the
Company Subsidiaries have been timely filed or requests for
extensions have been timely filed and any such extension shall have
been granted and not have expired, and all such filed returns are
true, complete and accurate in all respects. All taxes shown on such
returns have been paid in full (or withheld and deposited in the case
of withholding taxes) or adequate provision has been made for any
such taxes in the financial statements of the Company and the Company
Subsidiaries (in accordance with generally accepted accounting
principles). The Company and the Company Subsidiaries have timely
provided information statements to other persons as required by
applicable law and have timely complied with all requirements of the
Internal Revenue Code in respect of the verification of taxpayer
identification numbers. Other than as disclosed in Section 3.3(i) of
the Company's Disclosure Letter, there is no audit examination,
deficiency assessment, tax investigation or refund litigation
currently pending with respect to any taxes of the Company or any of
the Company Subsidiaries or any taxes required to be withheld by the
Company or any of the Company Subsidiaries. All taxes, interest,
additions, and penalties due with respect to completed and settled
examinations or concluded litigation relating to the Company or any
of the Company Subsidiaries, have been paid in full or adequate
provision has been made for any such taxes in the financial
statements of the Company and the Company Subsidiaries (in accordance
with generally accepted accounting principles). No extensions or
waivers of statutes of limitations have been given by or requested
with respect to any taxes of the Company or any of the Company
Subsidiaries or any taxes required to be withheld by the Company or
any of the Company Subsidiaries. All taxes, interest, additions and
penalties due with respect to any audit examination, deficiency
assessment or investigation with respect to any taxes relating to the
Company or any of the Company Subsidiaries have been paid in full,
settled, discharged or subject to indemnity in full from the FDIC
pursuant to the Assistance Agreement.
(j) Absence of Claims. Section 3.3(j) of the Company's
Disclosure Letter lists each pending action or proceeding in which
the Company or a Company
14
Subsidiary is a defendant or in which a counterclaim has been
asserted, as well as threatened litigation against the Company Bank,
its subsidiaries and the directors, officers and employees of the
Company and the Company Subsidiaries. Except as set forth therein or
in the Company Reports filed prior to the date hereof, there is no
pending litigation, controversy, claim, action or proceeding against
the Company or any of the Company Subsidiaries before any court or
Governmental Authority, and, to the best of the Company's knowledge,
no such litigation, proceeding, controversy, claim or action has been
threatened or is contemplated, in each case including any such
litigation, proceeding, controversy, claim or action brought or
threatened by (i) any of their present or former employees or (ii)
any person who sought to become employed by the Company or any of the
Company Subsidiaries.
(k) Absence of Regulatory Actions. Neither the Company nor
any of the Company Subsidiaries is a party to any cease and desist
order, written agreement or memorandum of understanding with, or a
party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or is a recipient of any extra-
ordinary supervisory letter from, or has adopted any board resolu-
tions at the request of the Regulatory Agencies nor has it been
advised by any Regulatory Agency that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or
requesting) any such order, directive, written agreement, memorandum
of understanding, extraordinary supervisory letter, commitment
letter, board resolutions or similar undertaking.
(l) Agreements. (i) Except for the Option Agreement and the
engagement letter of Sandler X'Xxxxx & Partners, L.P. with the
Company dated July 26, 1994, as amended by a letter dated January 6,
1995, the Company and the Company Subsidiaries are not bound by any
material contract (as defined in Item 601(b)(10) of Regulation S-K)
or any contract or other agreement, other than those relating to
credit type assets or securities, pursuant to which the Company or
any subsidiary is obligated to pay, or is entitled to receive, in any
12 month period, in excess of $100,000, in each case to be performed
after the date hereof that has not been filed with or incorporated by
reference in the Company's Reports or described in Section 3.3(l) of
the Company's Disclosure Letter. Except as disclosed in the
Company's Reports filed prior to the date of
15
this Agreement, neither the Company nor any of the Company
Subsidiaries is a party to any oral or written (i) consulting or
asset management agreement involving the payment of more than
$100,000 per annum, (ii) other than the Employment Agreements listed
in Section 3.3(n) of the Company's Disclosure Letter and the Change
of Control Agreements (copies of all of which have previously been
provided to the Acquiror) listed in Section 3.3(l) of the Company's
Disclosure Letter, any agreement with any executive officer or other
key employee of the Company or any of the Company Subsidiaries, the
benefits of which are contingent, or the terms of which are
materially altered or any payments or rights are accelerated, upon
the occurrence of a transaction involving the Company or any of the
Company Subsidiaries of the nature contemplated by this Agreement or
the Option Agreement and which provides for the payment of in excess
of $100,000, (iii) other than the Employment Agreements listed in
Section 3.3(n) of the Company's Disclosure Schedule and Change of
Control Agreements referred to in Section 3.3(l) of the Company's
Disclosure Letter, any agreement with respect to any executive
officer of the Company or any of the Company Subsidiaries providing
any term of employment or compensation guarantee extending for a
period longer than one year and for the payment of in excess of
$100,000 per annum, (iv) agreement or plan, including any stock
option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased,
or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement
or the Option Agreement or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contem-
plated by this Agreement or the Option Agreement or (v) agreement
containing covenants that limit the ability of the Company or any of
the Company Subsidiaries to compete in any line of business or with
any person, or that involve any restriction on the geographic area in
which, or method by which, the Company (including any successor
thereof) or any of the Company Subsidiaries may carry on its business
(other than as may be required by law or any regulatory agency).
(ii) Neither the Company nor any of the Company Subsidiaries
is in default under or in violation of any provision of any note,
bond, indenture, mortgage, deed of trust, loan agreement, lease or
other agreement to which it is a party or by which it is bound or to
which any of its respective properties or assets is subject.
16
(m) Labor Matters. Neither the Company nor any of the
Company Subsidiaries is a party to, or is bound by, any collective
bargaining agreement, contract, or other agreement or understanding
with a labor union or labor organization, nor is the Company or any
of the Company Subsidiaries the subject of any proceeding asserting
that it has committed an unfair labor practice or seeking to compel
it or any such subsidiary to bargain with any labor organization as
to wages and conditions of employment, nor is there any strike, other
labor dispute or organizational effort involving the Company or any
of the Company Subsidiaries pending or, to the knowledge of the
Company, threatened.
(n) Employee Benefit Agreements. (i) Section 3.3(n) of the
Company's Disclosure Letter contains a complete list of all pension,
retirement, stock option, stock purchase, stock ownership, savings,
stock appreciation right, profit sharing, deferred compensation,
consulting, bonus, group insurance, employment, termination,
severance, medical, health and other benefit plans, contracts,
agreements, arrangements, including, but not limited to, "employee
benefit plans", as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), incentive and
welfare policies, contracts, plans and arrangements and all trust
agreements related thereto in respect to any present or former
directors, officers, or other employees of the Company or any of the
Company Subsidiaries (hereinafter referred to collectively as the
"Employee Agreements").
(ii) All of the Employee Agreements comply in all material
respects with all applicable requirements of ERISA, the Internal
Revenue Code of 1986, as amended (the "Code") and other applicable
laws; neither the Company nor any of the Company Subsidiaries has
engaged in a "prohibited transaction" (as defined in Section 406 of
ERISA or Section 4975 of the Code) with respect to any Employee
Agreement that, assuming the taxable period of such transaction
expired as of the date hereof, would subject the Company to a
material tax or penalty imposed by either Section 4975 of the Code or
Section 502 of ERISA; and all contributions required to be made under
the terms of any Employee Agreement have been timely made or have
been reflected on the consolidated statements of condition contained
or incorporated by reference in the Reports.
(iii) Except for required premium payments, no liability to
the Pension Benefit Guaranty Corporation
17
(the "PBGC") has been or is expected by the Company or any of the
Company Subsidiaries to be incurred with respect to any Employee
Agreement which is subject to Title IV of ERISA ("Pension
Agreement"), or with respect to any "single-employer plan" (as
defined in Section 4001(a)(15) of ERISA) currently or formerly
maintained by the Company or any entity (an "ERISA Affiliate") which
is considered one employer with the Company under Section 4001 of
ERISA or Section 414(b), (c), (m) or (n) of the Code (an "ERISA
Affiliate Agreement"); and no proceedings have been instituted to
terminate any Pension Agreement or ERISA Affiliate Agreement.
(iv) No Pension Agreement or ERISA Affiliate Agreement had an
"accumulated funding deficiency" (as defined in Section 302 of ERISA
(whether or not waived)) as of the last day of the end of the most
recent plan year ending prior to the date hereof; there were no
"unfunded benefit liabilities" (as defined in Section 4001(a)(18) of
ERISA) under any Pension Agreement or ERISA Affiliate Agreement as of
the end of the most recent plan year with respect to the respective
Pension Agreement or ERISA Affiliate Agreement ending prior to the
date hereof, calculated on the basis of the assumptions prescribed by
such plans (and, to the best knowledge of the Company, PBGC
assumptions as of such date) as of the end of such plan year and
there has been no material adverse change in the financial condition
of any such Pension Agreement or ERISA Affiliate Agreement since the
last day of the most recent plan year; and no notice of a "reportable
event" (as defined in Section 4043 of ERISA) for which the 30-day
reporting requirement has not been waived has been required to be
filed for any Pension Agreement or ERISA Affiliate Agreement within
the 12-month period ending on the date hereof or will be required to
be filed in connection with the transactions contemplated in this
Agreement.
(v) Neither the Company nor any subsidiary of the Company
has provided or is required to provide security to any Pension
Agreement or to any ERISA Affiliate Agreement pursuant to Sec-
tion 401(a)(29) of the Code.
(vi) Neither the Company, the Company Subsidiaries, nor any
ERISA Affiliate has contributed to any "multiemployer plan", as
defined in Section 3(37) of ERISA, on or after September 26, 1980 or
any
18
"multiple employer plan" as described in Section 413 of the Code.
(vii) Each Employee Agreement of the Company or any of the
Company Subsidiaries which is an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) and which is intended to be a tax-
qualified plan within the meaning of Section 401(a) of the Code
(including the Retirement Plan of XxxxxXxxx Federal Savings Bank in
RSI Retirement Trust and the XxxxxXxxx Federal Savings Bank 401(k)
Savings Plan in RSI Retirement Trust) has received a favorable
determination letter (or such a letter has been requested) from the
Internal Revenue Service deeming such plan (a "Qualified Agreement")
to be qualified under Section 401(a) of the Code; and neither the
Company nor the Company Subsidiaries are aware of any circumstances
likely to result in revocation or denial of any such favorable
determination letter.
(viii) There is no pending or, to the best knowledge of the
Company, threatened material litigation, administrative action or
proceeding relating to any Employee Agreement.
(ix) There has been no announcement or commitment by the
Company or any subsidiary of the Company to create an additional
Employee Agreement, or to amend an Employee Agreement except for
amendments required by applicable law which do not materially
increase the cost of such Employee Agreement.
(x) The Company and the Company Subsidiaries do not have
any obligations for retiree health and life benefits under any
Employee Agreement except as set forth in Section 3.3(n)(x) of the
Company's Disclosure Letter, and there are no such Employee
Agreements that cannot be amended or terminated without incurring any
liability thereunder.
(xi) With respect to the Company or any of the Company
Subsidiaries, except as specifically identified in Section 3.3(n) of
its Disclosure Letter, the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not
result in any payment or series of payments by the Company or any
subsidiary of the Company to any person which is an "excess parachute
payment" (as defined in Section 280G of the Code) under any Employee
Agreement, increase or secure (by way of a trust or other vehicle)
any benefits or compensation payable
19
under any Employee Agreement, or accelerate the time of payment or
vesting of any such benefit or compensation.
(xii) With respect to each Employee Agreement, the Company has
supplied to the Acquiror a true and correct copy, if applicable, of
(A) the two most recent annual reports on the applicable form of the
Form 5500 series filed with the Internal Revenue Service (the "IRS"),
(B) such Employee Agreement, including all amendments thereto,
(C) each trust agreement and insurance contract relating to such
Employee Agreement, including all amendments thereto, (D) the most
recent summary plan description for such Employee Agreement, includ-
ing all amendments thereto, if the Employee Agreement is subject to
Title I of ERISA, (E) the most recent actuarial report or valuation
if such Employee Agreement is a Pension Agreement, (F) the most
recent determination letter issued by the IRS if such Employee
Agreement is a Qualified Agreement and (G) the most recent financial
statements and auditor's report.
(o) Title to Assets. The Company and each of the Company
Subsidiaries has good and marketable title to its properties and
assets (including any intellectual property asset such as, any
trademark, service xxxx, trade name or copyright) other than (i)
property as to which it is lessee, in which case the related lease is
valid and in full force and effect and (ii) property acquired in a
judicial foreclosure proceeding or by way of a deed in lieu of
foreclosure or similar transfer.
(p) Compliance with Laws. Except as disclosed in Sections
3.3(c) and 3.3(p) of the Company's Disclosure Letter, the Company and
each of the Company Subsidiaries:
(i) has all permits, licenses, certificates of authority,
orders and approvals of, and has made all filings, applications and
registrations with, federal, state, local and foreign governmental or
regulatory bodies that are required in order to permit it to carry on
its business as it is presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full
force and effect, and, to the best knowledge of the Company, no
suspension or cancellation of any of them is threatened; and
(ii) is not in violation of any applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conduct-
20
ing such businesses, including the Equal Credit Opportunity Act, the
Fair Housing Act, the Community Reinvestment Act, the Home Mortgage
Disclosure Act, the Americans With Disabilities Act, all other
applicable fair lending laws or other laws relating to discrimination
and the Bank Secrecy Act.
(q) Fees. Other than financial advisory services performed
for the Company by Sandler X'Xxxxx & Partners, L.P. in an amount and
pursuant to an agreement both previously disclosed to the Acquiror,
neither the Company nor any of the Company Subsidiaries, nor any of
their respective officers, directors, employees or agents, has
employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions, or finder's
fees, and no broker or finder has acted directly or indirectly for
the Company or any subsidiary of the Company, in connection with the
Agreement or the transactions contemplated hereby. The Company shall
not be liable for any financial services advisory fees incurred by
the Acquiror.
(r) Environmental Matters. (i) Except as set forth in
Section 3.3(r) of the Company's Disclosure Letter, with respect to
the Company and each of the Company Subsidiaries (to the extent,
however, that the following relates to Loan Properties, only to the
best knowledge of the executive officers of the Company and the
Company Bank):
(A) Each of the Company and the Company Subsidiaries,
the Participation Facilities, and the Loan Properties (each as
defined below) are, and have been, in substantial compliance
with all, and not liable under, Environmental Laws (as defined
below);
(B) There is no suit, claim, action, demand, executive
or administrative order, directive, investigation or proceeding
pending or, to the best knowledge of the Company, threatened,
before any court, governmental agency or board or other forum
against it or any of the Company Subsidiaries or any Participa-
tion Facility (x) for alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or
(y) relating to the presence of or release into the environment
of any Hazardous Material (as defined below), whether or not
occurring at or on a site owned, leased or
21
operated by the Company or any of the Company Subsidiaries or
any Participation Facility;
(C) There is no suit, claim, action, demand, executive
or administrative order, directive, investigation or proceeding
pending or threatened, before any court, governmental agency or
board or other forum relating to or against any Loan Property
(or the Company or any of the Company Subsidiaries in respect
of such Loan Property) (x) relating to alleged noncompliance
(including by any predecessor) with, or liability under, any
Environmental Law or (y) relating to the presence of or release
into the environment of any Hazardous Material whether or not
occurring at or on a site owned, leased or operated by a Loan
Property;
(D) The properties currently owned or operated by the
Company or any of the Company Subsidiaries (including, without
limitation, soil, groundwater or surface water on, under or
adjacent to the properties, and buildings thereon) are not
contaminated with and do not otherwise contain any Hazardous
Material (as defined below) other than as permitted under
applicable Environmental Law;
(E) None of it or any of the Company Subsidiaries has
received any notice, demand letter, executive or administrative
order, directive or request for information from any Federal,
state, local or foreign governmental entity or any third party
indicating that it may be in violation of, or liable under, any
Environmental Law;
(F) There are no underground storage tanks on, in or
under any properties or Participation Facility and no
underground storage tanks have been closed or removed from any
properties or Participation Facility which are or have been in
the ownership of it or any of the Company Subsidiaries;
(G) During the period of (l) its or any of the Company
Subsidiaries' ownership or operation of any of their respective
current properties, (m) its or any of the Company Subsidiaries'
participation in the management of any Participation Facility,
or (n) its or any of the Company Subsidiaries' holding of a
security
22
interest in a Loan Property, there has been no contamination by
or release of Hazardous Material in, on, under or affecting
such properties. Prior to the period of (x) its or any of the
Company Subsidiaries' ownership or operation of any of their
respective current properties, (y) its or any of the Company
Subsidiaries' participation in the management of any
Participation Facility, or (z) its or any of the Company
Subsidiaries' holding of a security interest in a Loan
Property, there was no contamination by or release of Hazardous
Material or oil in, on, under or affecting any such property,
Participation Facility or Loan Property;
(H) None of it or the Company Subsidiaries participates
in the management of a Loan Property or Participation Facility
to an extent that it would be deemed an "owner or operator" as
defined in 42 U.S.C. sec. 9601 or any similar Environmental
Law; and
(ii) The following definitions apply for purposes of this
Section 3.3(r): (w) "Loan Property" means any property in which the
applicable party (or a subsidiary of it) holds a security interest,
and, where required by the context, includes the owner or operator of
such property, but only with respect to such property;
(x) "Participation Facility" means any facility in which the
applicable party (or a subsidiary of it) participates in the
management (including all property held as trustee or in any other
fiduciary capacity) and, where required by the context, includes the
owner or operator of such property; (y) "Environmental Law" means (i)
any federal, state or local law, statute, ordinance, rule,
regulation, code, license, permit, authorization, approval, consent,
legal doctrine, order, directive, executive or administrative order,
judgment, decree, injunction, requirement or agreement with any
governmental entity, (A) relating to the protection, preservation or
restoration of the environment (which includes air, water vapor,
surface water, groundwater, drinking water supply, structures, soil,
surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety, or (B) the exposure
to, or the use, storage, recycling, treatment, generation, transpor-
tation, processing, handling, labeling, production, release or
disposal of, Hazardous Materials, in each case as amended and as now
or hereafter in effect, including all current Environmental Laws, all
future interpreta-
23
tions of current Environmental Laws and all future Environmental Laws
and subsequent interpretations thereof. The term "Environmental Law"
includes all federal, state and local laws, rules, regulations or
requirements relating to the protection of the environment or health
and safety including, without limitation, the federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, the federal
Water Pollution Control Act of 1972, the federal Clean Air Act, the
federal Clean Water Act, the federal Resource Conservation and
Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the federal Solid Waste Disposal and the federal
Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of
1970, the Federal Hazardous Materials Transportation Act, or any so-
called "Superfund" or "Superlien" law, each as amended and as now or
hereafter in effect, and (ii) any common law or equitable doctrine
(including injunctive relief and tort doctrines such as negligence,
nuisance, trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result
of, the presence of or exposure to any Hazardous Material; and
(z) "Hazardous Material" means any substance in any concentration
which is or could be detrimental to human health or safety or to the
environment, currently or hereafter listed, defined, designated or
classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by type or
by quantity, including any substance containing any such substance as
a component. Hazardous Material includes, without limitation, any
toxic waste, pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, special waste, industrial substance, oil
or petroleum or any derivative or by-product thereof, radon,
radioactive material, asbestos, asbestos-containing material, urea
formaldehyde foam insulation, lead and polychlorinated biphenyl.
(s) Allowance; Loans and OREO. (i) The allowance for loan
losses shown on the Company's unaudited consolidated statements of
condition as of June 30, 1995 was, and the allowance for loan losses
shown on the consolidated statements of condition in its Reports for
periods ending after the date of this Agreement will be, adequate, as
of the date thereof, under generally accepted accounting principles
24
applicable to federal savings associations and savings and loan
holding companies, consistently applied.
(ii) Section 3.3(s) of the Company's Disclosure Letter sets
forth by category the amounts of all assets of the Company and the
Company Subsidiaries that have been criticized or classified by it as
"Special Mention", "Substandard", "Doubtful", "Loss" or words of
similar import. Neither the Company nor any Company Subsidiary has
any unfunded commitment to make any commercial loan (real estate or
other) except as set forth in Section 3.3(s) of the Company's
Disclosure Letter. Except as set forth in Section 3.3(s) of the
Company's Disclosure Letter, there is no disagreement with any
Regulatory Agency as to any such classification. The Other Real
Estate Owned ("OREO") included in any non-performing assets of the
Company or any of the Company Subsidiaries is carried net of reserves
at the lower of cost or fair value, based on independent or staff
appraisals, less estimated selling costs.
(t) Antitakeover Provisions Inapplicable. No "fair price",
"moratorium", "control share acquisition" or other similar
antitakeover statute or regulation (including Section 203 of the
DGCL) (each, a "Takeover Law") is applicable to the Company, the
Company Bank, the Shares, the Option, the Merger, the Bank Merger or
the transactions contemplated thereby or hereby.
(u) Material Interests of Certain Persons. Except as
disclosed in the Company's Proxy Statement for its 1995 Annual
Meeting of Shareholders, no officer or director of the Company, or
any "associate" (as such term is defined in Rule 12b-2 under the
Securities Exchange Act) of any such officer or director, has any
material interest in any material contract or property (real or per-
xxxxx), tangible or intangible, used in or pertaining to the business
of the Company or any of the Company Subsidiaries.
(v) Insurance. The Company and the Company Subsidiaries are
insured, and since December 31, 1992, have been insured, for
reasonable amounts with financially sound and reputable insurance
companies, against such risks as companies engaged in a similar
business would, in accordance with good business practice,
customarily be insured. All of the insurance policies and bonds
maintained by the Company and the Company Subsidiaries are in full
force and effect, the Company and the Company Subsidiaries are not,
and other
25
than as disclosed in Section 3.3(c) of the Company Disclosure Letter,
after the execution, delivery and performance of this Agreement, will
not be, in default thereunder and all material claims thereunder and
notices related thereto have been filed in due and timely fashion.
Since December 31, 1992, except as set forth in Sections 3.3(j) and
3.3(v) of the Company's Disclosure Letter, no claim by the Company or
any of the Company Subsidiaries on or in respect of an insurance
policy or bond has been declined or refused by the relevant insuror
or insurors other than because such claim was below the applicable
deductible amount or not otherwise insurable under the policy. In
the best judgment of the Company's management, such insurance
coverage is adequate.
(w) Investments. (i) Except for pledges to secure public and
trust deposits, FHLB borrowings, put options in connection with the
sale of municipal bonds (all of such put option positions being
listed in Section 3.3(w) of the Company's Disclosure Letter) and
reverse repurchase agreements entered into in arm's-length
transactions pursuant to normal commercial terms and conditions and
other pledges required by law, none of the investments reflected in
the consolidated statements of condition of the Company included in
the Company's Report on Form 10-Q for the quarter ended June 30,
1995, and none of the investments made by it or any of the Company
Subsidiaries since December 31, 1994, is subject to any restriction
(contractual, statutory or otherwise) that would materially impair
the ability of the entity holding such investment freely to dispose
of such investment at any time.
(ii) Except as set forth in Section 3.3(w) of the Company's
Disclosure Letter, neither the Company nor any Company Subsidiary is
a party to or has agreed to enter into an exchange-traded or over-
the-counter equity, interest rate, foreign exchange or other swap,
forward, future, option, cap, floor or collar or any other contract
that is not included on the consolidated statements of condition and
is a derivative contract (including various combinations thereof)
(each, a "Derivatives Contract") or owns securities that (1) are
referred to generically as "structured notes," "high risk mortgage
derivatives," "capped floating rate notes" or "capped floating rate
mortgage derivatives" or (2) are likely to have changes in value as a
result of interest or exchange rate changes that significantly exceed
normal changes in value attributable to interest or exchange rate
changes, except for those Derivatives
26
Contracts and other instruments legally purchased or entered into in
the ordinary course of business, consistent with safe and sound
banking practices and regulatory guidance, and listed (as of the date
hereof) in Section 3.3(w)(ii) of its Disclosure Letter or disclosed
in its Reports filed on or prior to the date hereof.
(x) Books and Records. The books and records of the Company
and the Company Subsidiaries on a consolidated basis have been, and
are being, maintained in accordance with applicable legal and
accounting requirements and reflect the substance of events and
transactions that should be included therein.
(y) Indemnification. Except as provided in Employment
Agreements or the charter or by laws of the Company or the Company
Bank, neither the Company nor any Company Subsidiary is a party to
any indemnification agreement with any of its present or future
directors, officers, employees, agents or other persons who serve or
served in any other capacity with any other enterprise at the request
of the Company (a "Covered Person"), and, except as set forth in
Section 3.3(y) of the Company's Disclosure Letter, to the best
knowledge of the Company, there are no claims for which any Covered
Person would be entitled to indemnification under Section 5.7 if such
provisions were deemed to be in effect.
(z) Assistance Agreement and Other FDIC Contracts. (i) Set
forth in Section 3.3(z) of the Company's Disclosure Letter is a list
of all contracts, amendments, waivers and interpretive correspondence
relating to the Assistance Agreement, and a list of all amendments
relating to (a) the Purchase and Assumption Agreement among the FDIC
in its corporate capacity, the FDIC as conservator of XxxxxXxxx
Federal Savings Bank and the FDIC as receiver of XxxxxXxxx Savings,
FSB, dated as of January 24, 1992, as supplemented by Memorandum of
Understanding No. 1 dated as of March 9, 1992, Memorandum of
Understanding No. 2 dated as of July 28, 1993 and Memorandum of
Understanding No. 3 dated as of August 18, 1995 and (b) the Indemnity
Agreement dated as of January 24, 1992 between the FDIC in its
corporate capacity and the FDIC, as conservator for XxxxxXxxx Federal
Savings Bank, as supplemented by a Memorandum of Understanding
Regarding Indemnity Agreement dated as of July 28, 1993 (all of the
foregoing being the "FDIC Contracts"). A copy of each such document
has been provided to the Acquiror. The
27
Assistance Agreement and the other FDIC Contracts (x) shall remain in
full force and effect after the Closing Date and after the
consummation of the Merger and Bank Merger and (y) are assignable by
operation of law by the Company Bank upon the occurrence of the Bank
Merger without any further required action by the FDIC. Each of such
documents has been duly authorized, executed and delivered by each of
the Company Bank and, to the knowledge of the Company, the FDIC and,
to the knowledge of the Company, constitute binding obligations of
the FDIC enforceable against the FDIC in accordance with their terms.
The Company Bank has appropriate internal control and record keeping
systems which enable it to comply with its obligations under the
Assistance Agreement. The Company Bank has performed all of its
obligations under the FDIC Contracts in accordance with the terms
thereof (including the terms of Exhibit 2.2 to the Assistance
Agreement).
(ii) The aggregate dollar amount of Net Charge-Offs (as
defined in the Assistance Agreement) from the Commencement Date (as
defined in the Assistance Agreement) through and including June 30,
1995 is $105,158,000 and the aggregate dollar amount of Reimbursable
Expenses (as defined in the Assistance Agreement) from the
Commencement Date through and including June 30, 1995 is $13,339,000.
The Initial Threshold Quarter (as defined in the Assistance
Agreement) has not yet occurred. As of June 30, 1995, the total
dollar amount of losses constituting Charge-Offs with respect to Bulk
Sales (as defined in the Assistance Agreement) during the Bulk Sale
Period (as defined in the Assistance Agreement) is equal to $0 and
the Successor Bulk Sale Amount (as defined in the Assistance
Agreement) would be equal to $32,500,000 if a successor to the
Company Bank had taken on the business of the Company Bank as of such
date.
(iii) The latest certificate filed by the Company Bank
with the FDIC pursuant to the Assistance Agreement is true and
correct and prepared in compliance with the terms of the Assistance
Agreement.
(aa) Shared-Loss Assets. Section 3.3(aa) of the Company's
Disclosure Letter lists, as of the date hereof, all Shared-Loss
Assets and the Book Value (as defined in the Assistance Agreement) as
of August 31, 1995 for each such Shared-Loss Asset.
28
(ab) Recourse Sales. Section 3.3(ab) of the Company's
Disclosure Letter lists all transactions in which any Company
Subsidiary has sold assets with recourse (other than recourse related
solely to breaches of customary representations and warranties
relating to ownership, title, authority and the absence of liens)
since January 24, 1992 where the potential for such recourse still
exists as of the date hereof, the amount and type of consideration
received in each such sale, the amount of recourse debt held by the
Company or any Company Subsidiary or other recourse obligation or
liability with respect to each such sale (and any indication of
seeking recourse) and all agreements, and any amendments or waivers
with respect thereto, relating to such sales. A copy of all such
agreements and all amendments and waivers thereto has been provided
to the Acquiror.
Section 3.4. Representations and Warranties of the Acquiror.
Subject to Sections 3.1 and 3.2 and except as set forth in the Disclosure
Letter relating to the Acquiror referred to therein, the Acquiror
represents and warrants to the Company that:
(a) Recitals True. The facts set forth in the Recital A of
this Agreement are true and correct.
(b) Corporate Qualification. The Acquiror and Merger Sub each
has the requisite corporate and other power and authority (including
all federal, state, local and foreign government authorizations) to
carry on its respective businesses as now being conducted and to own
their respective properties and assets.
(c) Corporate Authority. The Acquiror and Merger Sub each has
the requisite corporate power and authority, and has taken all
corporate or other action necessary, in order to execute and deliver,
and to perform its respective obligations under, this Agreement.
This Agreement is a valid and binding agreement of each of the
Acquiror and Merger Sub enforceable against the Acquiror and Merger
Sub, respectively, in accordance with its terms subject as to
enforcement to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditor's rights and to general equity
principles.
(d) No Violations. The execution, delivery and performance of
this Agreement by the Acquiror and Merger Sub do not, and the
consummation of the
29
transactions contemplated hereby by the Acquiror and Merger Sub will
not, constitute (i) assuming receipt of the approvals referred to in
Section 6.1(b), a breach or violation of, or a default under, any
law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument of the
Acquiror or, when duly incorporated, Merger Sub or to which the
Acquiror (or any of its properties) is subject or Merger Sub, when
duly incorporated (or any of its properties) will be subject, (ii) a
breach or violation of, or a default under, the articles of
incorporation or by-laws or similar organizational document of the
Acquiror or, when duly incorporated, Merger Sub or (iii) a breach or
violation of, or a default under (or an event which with due notice
or lapse of time or both would constitute a default under), or result
in the termination of, accelerate the performance required by, or
result in the creation of any Liens upon any of the properties or
assets of the Acquiror or, when duly incorporated, Merger Sub under,
any of the terms, conditions or provisions of any note, bond,
indenture, deed of trust, loan agreement or other agreement, instru-
ment or obligation to which the Acquiror is or Merger Sub, when duly
incorporated will be, a party, or to which any of their respective
properties or assets may be subject and the consummation of the
transactions contemplated hereby will not require any approval,
consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval,
consent or waiver of any other party to any such agreement, indenture
or instrument, other than the Requisite Regulatory Approvals.
(e) Access to Funds. The Acquiror has, or on the Closing Date
will have, all funds necessary to consummate the Merger and pay the
aggregate Merger Consideration.
(f) Absence of Regulatory Actions. As of the date hereof,
neither the Acquiror nor any of its subsidiaries is a party to any
cease and desist order, written agreement or memorandum of under-
standing with, or a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has
adopted any board resolutions at the request of the Regulatory
Agencies nor has it been advised by any Regulatory Agency that it is
contemplating issuing or requesting (or is considering the appro-
priateness of issuing or requesting) any such
30
order, directive, written agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking which would materially and
adversely affect the ability of the Acquiror to perform its material
obligations hereunder.
(g) Absence of Certain Changes. From June 30, 1995 to the date
hereof, there has not been any event with respect to the Acquiror
which would materially and adversely affect the ability of the
Acquiror to perform its material obligations hereunder.
(h) Litigation. As of the date hereof, there is no pending
litigation, controversy, claim, action or proceeding against the
Acquiror or any of its subsidiaries before any court or Governmental
Authority, and to the best of the Acquiror's knowledge, no such
litigation, proceeding, controversy, claim or action has been
threatened or is contemplated, which would materially and adversely
affect the ability of the Acquiror to perform its material
obligations hereunder.
(i) Compliance With Laws. As of the date hereof, the Acquiror
and each of its subsidiaries is not in violation of any applicable
federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto or
to the employees conducting such businesses, including, without
limitation, the Equal Credit Opportunity Act, the Fair Housing Act,
the Community Reinvestment Act, the Home Mortgage Disclosure Act, the
Americans With Disabilities Act, all other applicable fair lending
laws or other laws relating to discrimination and the Bank Secrecy
Act, the violation of which would materially and adversely affect the
ability of the Acquiror to perform its material obligations
hereunder.
(j) Regulatory Approvals. As of the date hereof, the executive
officers of the Acquiror know of no reason pertaining to the Acquiror
why any of the Requisite Regulatory Approvals should not be obtained
without the imposition of any condition or restriction described in
the proviso to Section 6.1(b).
ARTICLE IV. CONDUCT PENDING THE MERGER
Section 4.1. Conduct of the Company's Business Prior to the
Effective Time. Except as expressly provided in this Agreement, during the
period from the date of this
31
Agreement to the Effective Time, the Company shall, and shall cause each of
the Company Subsidiaries to, (i) conduct its business and maintain its
books and records in the usual, regular and ordinary course consistent with
past practice, (ii) use all reasonable efforts to maintain and preserve
intact its business organization, properties, leases, employees and
advantageous business relationships and retain the services of its officers
and key employees, (iii) take no action which would adversely affect or
delay the ability of the Company, the Acquiror, the Merger Sub or the
Company Bank to obtain any necessary approvals, consents or waivers of any
governmental authority required for the transactions contemplated hereby or
to perform its covenants and agreements on a timely basis under this
Agreement, (iv) comply with the Assistance Agreement and (v) take no action
that is reasonably likely to have a Material Adverse Effect (as defined in
Section 3.2 hereof) on the Company.
Section 4.2. Forbearance by the Company. (i) During the
period from the date of this Agreement to the Effective Time, the Company
shall not, and shall not permit any of the Company Subsidiaries, without
the prior written consent of the Acquiror (which consent shall not be
unreasonably withheld and the Acquiror will provide a response, whether a
consent or a refusal to consent, within two business days of receipt of a
request for any such consent), to:
(a) incur any indebtedness for borrowed money, other than
deposits and short term obligations taken or incurred in the ordinary
course of business of the Company Bank, or assume, guarantee, endorse
or otherwise as an accommodation become responsible for the
obligations of any other person;
(b) adjust, split, combine or reclassify any capital stock;
make, declare or pay any dividend or make any other distribution on,
or directly or indirectly redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock,
or grant any stock appreciation rights or grant, sell or issue to any
individual, corporation or other person any right or option to
acquire, or securities evidencing a right to convert into or acquire,
any shares of its capital stock; or issue any additional shares of
capital stock except pursuant to (i) the exercise of stock options
and related SARs outstanding as of the date hereof and on the terms
in effect on the date hereof or (ii) the Option Agreement;
32
(c) other than in the ordinary course of business consistent
with past practice and pursuant to policies currently in effect and
involving less than $10,000,000, sell, transfer, mortgage, encumber
or otherwise dispose of any of its properties, leases or assets to
any person, or cancel, release or assign any indebtedness of any such
person, except pursuant to contracts or agreements in force at the
date of this Agreement;
(d) enter into or amend any employment agreement (other than
to extend the term of the existing Employment Agreements and Change
of Control Agreements listed in Sections 3.3(n) and 3.3(l) of the
Company's Disclosure Letter in accordance with the terms thereof)
with any Employee or director, hire any new officers, fill any
vacancies created by departure (for any reason) of any officer more
senior than vice president, increase in any manner the compensation
or fringe benefits of any of its Employees or directors, or create or
institute, or make any payments pursuant to, any severance plan or
package, or pay any pension or retirement allowance not required by
any existing plan or agreement to any such Employees or directors, or
become a party to, amend or commit itself to, or fund or otherwise
establish any trust or account related to, any Employee Agreement (as
defined in Section 3.3(n)), with or for the benefit of any Employee,
other than general increases in compensation in the ordinary course
of business consistent with past practice or any amendment to any
Employee Agreement required by applicable law (provided that any such
amendment shall provide the least increase to cost permitted under
such applicable law), or voluntarily accelerate the vesting of any
stock options, SARs or other compensation or benefit;
(e) other than in the ordinary course of business consistent
with current and past practices, make any investment either by pur-
chase of stock or securities, contributions to capital, property
transfers, or purchase of any property or assets of any person;
provided that no investment or series of related investments shall be
made in an amount in excess of $10,000,000, except (i) in the
following two types of investments: (A) overnight federal funds or
overnight deposits with the FHLB or (B) treasury bills of the United
States of America with a remaining term of six months or less (in
which case the Company shall provide prior notice thereof to the
Acquiror to the extent the investment exceeds $10,000,000) or (ii) in
investments
33
in securities issued by the Government National Mortgage Association,
the Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation to the extent required for the Company Bank to
maintain its status as a "qualified thrift lender" under HOLA (in
which case the Company shall provide prior notice thereof to the
Acquiror), and in no event shall the Company or any subsidiary make
any acquisition of equity securities or business operations;
(f) enter into or terminate any contract or agreement, or
make any change in any of its leases or contracts, other than (i) as
expressly contemplated by this Agreement, (ii) with respect to those
involving aggregate payments of less than, or the provision of goods
or services with a market value of less than, $50,000 in the
aggregate or (iii) with respect to those which may be cancelled by
the Company or a Company Subsidiary with less than 60 days' notice
with a penalty of less than $50,000;
(g) settle any claim, action or proceeding involving any
liability of the Company or any of the Company Subsidiaries for money
damages in excess of reserves therefor plus $500,000 or involving
restrictions upon the operations of the Company or any of the Company
Subsidiaries;
(h) except in the ordinary course of business and in an
amount less than $10,000,000 (in book value) waive or release any
material right or collateral or cancel or compromise any extension of
credit or other debt or claim;
(i) (A) make, increase or purchase any loan, lease, advance,
credit enhancement or other extension of credit, or make any
commitment in respect of any of the foregoing, except (i) loans,
advances or commitments in individual amounts less than $1,000,000
($750,000 in the case of 1-4 family residential mortgage loans
including loans on co-operatives, condominiums and townhouses and
$50,000 in the case of home equity lines) made in the ordinary course
of business consistent with past practice and made in conformity with
all applicable policies and procedures, (ii) loans or advances as to
which the Company has a legally binding obligation to make such loan
or advance as of the date hereof and a description of which has been
provided by the Company in writing to the Acquiror prior to the
execution of this Agreement, (iii) loans,
34
advances or commitments made to facilitate the sale of Shared-Loss
Assets which are made in compliance with the terms of the Assistance
Agreement, are at market rate and are reasonably acceptable to the
Acquiror or (iv) overdraft loans or passbook loans or student loans
pursuant to the New York State Higher Education Program or other New
York State or other Federal guaranteed programs made in the ordinary
course of business consistent with past practice and made in
conformity with all applicable policies and procedures; or (B)
renegotiate, renew or extend the term of any loan, lease, advance,
credit enhancement or other extension of credit, or make any
commitment in respect of any of the foregoing, except renegotiations,
renewals or extensions of loans, advances or commitments in each case
in amounts less than $10,000,000 on market terms, with a maturity or
expiration date no later than June 30, 1998, with a loan to value
ratio of 80% or less, in the ordinary course of business consistent
with past practice and in conformity with all applicable policies and
procedures or renegotiations, renewals or extensions of overdraft
loans or passbook loans made in the ordinary course of business
consistent with past practice and made in conformity with all
applicable policies and procedures;
(j) except as contemplated by Section 5.2 change its methods
of accounting as in effect at December 31, 1994, except as required
by changes in generally accepted accounting principles as concurred
in by the Company's independent auditors, and in the case of a new
accounting pronouncement that becomes effective (but is not required
to be implemented) prior to the Closing Date, with the concurrence of
the Company's independent auditors and the Acquiror;
(k) enter into any new activities or lines of business, or
cease to conduct any activities or lines of business that it conducts
on the date hereof, or conduct any business activity not consistent
with past practice;
(l) amend its certificate of incorporation or by-laws or
similar governing documents;
(m) make any capital expenditure in excess of $250,000
individually or $1,000,000 in the aggregate; or
(n) cause any Shared Loss Asset to cease to be covered by the
benefits of the Assistance Agreement (or
35
reduce or jeopardize such coverage) unless such Shared Loss Asset is
sold without recourse (or if with recourse, such recourse shall be
limited to recourse relating to breaches of customary representations
and warranties relating to ownership, title, authority and the
absence of liens) in compliance with the terms of the Assistance
Agreement;
(o) agree to, or make any commitment to, take any of the
actions prohibited by this Section 4.2.
(ii) The Chairman of the Company shall participate in any
decision with respect to any of the acts referred to in this Section 4.2
involving an amount in excess of $1,000,000 and the Acquiror's consent
shall be required for any act referred to in this Section 4.2 involving an
amount in excess of $10,000,000.
Section 4.3. Cooperation. The Company and the Company Bank
each shall cooperate with Acquiror and Merger Sub in completing the
transactions contemplated hereby and shall not take, cause to be taken or
agree or make any commitment to take any action: (i) that would cause any
of the representations or warranties of it that are set forth in Article
III hereof not to be true and correct, to the extent contemplated by
Section 3.2, or (ii) that is inconsistent with or prohibited by Section 4.1
or Section 4.2.
ARTICLE V. COVENANTS
Section 5.1. Acquisition Proposals. The Company agrees that
neither it nor any of the Company Subsidiaries nor any of the respective
officers and directors of the Company or the Company Subsidiaries shall,
and the Company shall direct and use its best efforts to cause its
employees, agents and representatives (including any investment banker,
attorney or accountant retained by it or any of the Company Subsidiaries)
not to, directly or indirectly, initiate, solicit, encourage or otherwise
facilitate any inquiries or the making of any proposal or offer (including
any proposal or offer to stockholders of the Company) with respect to a
merger, consolidation or similar transaction involving, or any purchase of
all or any significant portion of the assets or any equity securities of,
the Company or any of the Company Subsidiaries (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or engage in
any negotiations concerning, or provide any confidential information or
data to, or have any discussions with, any person relating to an
36
Acquisition Proposal, or otherwise facilitate any effort or attempt to make
or implement an Acquisition Proposal; provided, however that the Company
may furnish or cause to be furnished such confidential information or data
and may participate in such negotiations or discussions directly or through
its representatives if the Company's board of directors, after having
consulted with and considered the advice of the Company's board of
director's independent outside counsel, has determined that any such action
is necessary in order for the Company's board of directors to discharge
their fiduciary duties under applicable laws. The Company will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of
the foregoing and enforce any confidentiality agreements. The Company will
take the necessary steps to inform promptly the appropriate individuals or
entities referred to in the first sentence hereof of the obligations
undertaken in this Section 5.1. The Company agrees that it will notify the
Acquiror immediately if any such inquiries, proposals or offers are
received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with
the Company or any of the Company Subsidiaries. The Company also agrees
that it promptly shall request each other person (other than the Acquiror)
that has heretofore executed a confidentiality agreement in connection with
its consideration of acquiring the Company or any of the Company
Subsidiaries to return or destroy all confidential information heretofore
furnished to such person by or on behalf of the Company or any of the
Company Subsidiaries.
Section 5.2. Certain Policies of the Company. At the request
of the Acquiror and consistent with the Assistance Agreement, the Company
shall modify and change its loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of
reserves) after the receipt of all required federal depository institution
regulatory approvals and prior to the Effective Time so as to be consistent
on a mutually satisfactory basis with those of the Acquiror and generally
accepted accounting principles; provided that the Company shall not be
required to take any such action prior to the business day preceding the
Closing Date. The Company's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached in
any respect for any purpose as a consequence of any modifications or
changes undertaken solely on account of this Section 5.2. The Acquiror
agrees to hold harmless, indemnify and defend the Company and the Company
Subsidiaries, and their respective directors, officers and
37
employees for any loss, claim, liability or other damage caused by or
resulting from compliance with this Section 5.2.
Section 5.3. Employees. (a) Each person who is an officer or
employee of the Company or any Company Subsidiary immediately prior to the
Effective Time (an "Employee") shall, after the Effective Time, remain an
Employee of the Surviving Corporation, or of a subsidiary, as the case may
be, until such person's employment is terminated by resignation, removal,
death, disability or otherwise; provided, however, that nothing in this
Agreement shall at any time, confer upon any Employee any right or benefit
whatsoever or, following the Effective Time, limit or restrict the right of
the Surviving Corporation or any of its subsidiaries to terminate the
employment of any Employee for any reason whatsoever, with or without
cause.
(b) As soon as practicable following the Effective Time, the
Acquiror will offer employee benefit plans and programs to Employees who
continue in the employ of the Surviving Corporation (or any of its
subsidiaries) or become employed by the Acquiror (or any of its
subsidiaries) that are no less favorable in the aggregate than employee
benefit plans and programs provided to employees of the Acquiror and its
subsidiaries who are employed in substantially similar positions; provided
that no specific employee benefit plans or programs need be provided and
the Acquiror may provide such Employees with the Company Bank's severance
plan in lieu of any similar plan of the Acquiror. Notwithstanding the
foregoing, the Acquiror will provide, or cause to be provided, retiree
medical and life insurance benefits to former employees of the Company (and
the Company Subsidiaries) who have retired and are eligible for such
benefits under the Company Bank's written retiree medical and life
insurance plan as of the Effective Time; provided, however, that the
Acquiror may adjust the employee contribution and benefit levels under such
plan providing for such benefits and provided, further, that the Acquiror
shall be under no obligation to provide retiree medical or life benefits to
any Employee.
(c) Any Employee who becomes a participant in any employee
benefit plan or program of the Acquiror or any of its subsidiaries shall,
for purposes of eligibility and vesting, be given credit under such plan or
program for all service credited under similar plans or programs of the
Company or any of the Company Subsidiaries, to the extent such crediting of
service shall not have any adverse legal effect upon Acquiror's plan or
program, including, without
38
limitation, the failure to satisfy any nondiscrimination test under the
Code.
(d) The Acquiror shall honor the Employment Agreements dated
September 22, 1994 between the Company and, respectively, Xxxxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxx, Xxxx X. Xxxxxxx, Xxxx X. XxXxxx, Xxxxxxxx X.
Xxxxxxxx, Xxxxx X. Xxxxxx and Xxxxxx X. Xxxx by paying to each such
individual on the Closing Date in the form of a lump sum, the amounts that
would be due under each agreement less withholding as if each such
individual had effectively terminated employment immediately after the
Effective Time with full entitlement to lump sum cash benefits following a
"change of control" as defined in such Employment Agreements, regardless of
any other requirements in the Employment Agreements and all of the
provisions of such Employment Agreements shall be of no further effect as
of the Closing Date except for the provisions relating to tax
indemnification in Section 12 thereof and the provisions relating to
confidential information in Section 9 thereof. The Acquiror shall honor
the Change of Control Agreements dated various dates between the Company
Bank and individuals listed in Section 3.3(l) of the Company's Disclosure
Letter by paying to each such individual on the Closing Date in the form of
a lump sum, the amounts that would be due if each such individual had
effectively terminated employment immediately after the Effective Time with
full entitlement to lump sum cash benefits following a "change in control"
as defined in the Change of Control Agreements, regardless of any other
requirements in the Change of Control Agreements and all of the provisions
of such Change of Control Agreements shall be of no further effect as of
the Closing Date except for (i) continuation of welfare benefit insurance
for one year following the Closing Date pursuant to the welfare benefit
plans provided by the Acquiror or its subsidiaries to employees generally
following the Closing Date and (ii) the provisions in Section 9 of such
agreements relating to confidential information.
(e) Xxxxxxx X. Xxxxxxx shall be named a vice chairman of each
of the Acquiror and Republic National Bank of New York. Xxxxxx X. Xxxxxx
shall be named an executive vice president of Republic National Bank of New
York. Messrs. Gunther, LaRosa, Xxxxxxxx, Xxxxxx and Xxxx shall at the
Closing Date be named officers of the Acquiror or one of its subsidiaries
and shall each be entitled for a period of two years from the Closing Date
to benefits (for such person and all qualifying family members and
dependents) under all welfare insurance benefit plans, practices, policies
and programs that are maintained by Acquiror for similarly situated
employees.
39
(f) The Company shall cause the Company's 1993 Stock Incentive
Plan and Director's Stock Option Plan and the Company Bank's Supplemental
Executive Retirement Plan to be terminated effective as of the Effective
Time.
(g) The Company shall provide to Employees on a timely basis
any applicable notices (including any notices reasonably requested by the
Acquiror) under the Worker Adjustment and Retraining Notification Act and
any comparable state law.
(h) The Company and the Company Bank shall take all necessary
action to cause benefit accruals under any tax qualified retirement plan of
the Company Bank to be frozen as of the Effective Time or, at the request
of the Acquiror, shall cause any such retirement plan to be terminated as
of the Effective Time and annuities to be purchased for participants.
(i) The annual incentive plan for 1996 for the Company, the
Company Bank and their subsidiaries shall be based upon, and be no more
favorable than, the annual incentive plan of the Company, the Company Bank
and their subsidiaries for 1995, except the amounts thereunder shall be
pro-rated for the portion of the year from January 1, 1996 until the
Closing Date.
Section 5.4. Access and Information. (a) Upon reasonable
notice, the Company shall (and shall cause the Company Subsidiaries to)
afford to the Acquiror and its representatives (including, without
limitation, directors, officers and employees of the Acquiror and its
affiliates, and counsel, accountants and other professionals retained by
the Acquiror) such access (including, without limitation, for the purpose
of conducting supplemental due diligence reviews) during normal business
hours throughout the period prior to the Effective Time to the books,
records (including, without limitation, loan and credit files, tax returns
and work papers of independent auditors), properties, personnel and to such
other information as the Acquiror may reasonably request. The Acquiror
will not, and will cause its representatives not to, use any information
obtained pursuant to this Section 5.4 for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement. Subject
to the requirements of law, the Acquiror will keep confidential, and will
cause its representatives to keep confidential, all information and
documents obtained pursuant to this Section 5.4 unless such information
(i) was already known to the Acquiror or an affiliate of the Acquiror other
than confidential information subject to the letter agreement dated October
40
13, 1994 between the Company and the Acquiror, (ii) becomes available to
the Acquiror or an affiliate of the Acquiror from other sources not known
by such party to be bound by a confidentiality agreement, (iii) is
disclosed with the prior written approval of the Company or (iv) is or
becomes readily ascertainable from published information or trade sources.
In the event that this Agreement is terminated or the transactions
contemplated by this Agreement shall otherwise fail to be consummated, the
Acquiror shall promptly cause all copies of documents or extracts thereof
containing information and data as to the Company or the Company
Subsidiaries to be returned to the Company or the Company Subsidiaries
which furnished the same.
(b) No investigation pursuant to this Section 5.4 or
otherwise shall affect or be deemed to modify any representation or
warranty made herein.
Section 5.5. Certain Filings, Consents and Arrangements. The
parties shall (a) as soon as reasonably practicable make any filings and
applications required to be filed in order to obtain all approvals,
consents and waivers of governmental authorities necessary or appropriate
for the consummation of the transactions contemplated hereby (including the
Bank Merger) or by the Option Agreement, (b) cooperate with one another (i)
in promptly determining what filings are required to be made or approvals,
consents or waivers are required to be obtained under any relevant federal,
state or foreign law or regulation and (ii) in promptly making any such
filings, furnishing information required in connection therewith and
seeking timely to obtain any such approvals, consents or waivers and (c)
deliver to the other copies of the publicly available portions of all such
filings and applications promptly after they are filed.
Section 5.6. Takeover Laws. The Company shall take all
reasonable steps (i) to exempt the Company, the Agreement and the Option
Agreement from the requirements of any Takeover Law that may apply or
purport to apply to the Option, the Merger or the Bank Merger, by action of
its board of directors or otherwise and (ii), upon the request of the
Acquiror, to assist in any challenge by the Acquiror to the applicability
to the Merger of any state antitakeover law.
Section 5.7. Indemnification; Directors' and Officers'
Insurance. (a) From and after the Effective Time through the sixth
anniversary of the Effective Time, the Acquiror agrees to indemnify and
hold harmless each director and officer of the Company serving as of the
date hereof and
41
each director and officer of the Company Bank serving as of the date hereof
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties"), against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of matters existing or occurring at or prior
to the Effective Time, whether asserted or claimed prior to, at or after
the Effective Time, to the fullest extent to which such Indemnified Party
was entitled under, and subject to the terms (including reimbursement
terms) and conditions that might be imposed by, the DGCL or federal law
applicable to federal savings associations, the Company's certificate of
incorporation and by-laws and the Company Bank's charter and by-laws, all
as in effect on the date hereof and applicable to such particular
Indemnified Party and consistent with the practices of the Company and the
Company Bank as of the date hereof. The Acquiror shall also advance
expenses as incurred to the fullest extent to which such Indemnified
Parties were entitled under, and subject to the terms (including
reimbursement terms) and conditions that might be imposed by, the DGCL or
federal law applicable to federal savings associations, the Company's
certificate of incorporation and by-laws and the Company Bank's charter and
by-laws, as in effect on the date hereof and applicable to such particular
Indemnified Party and consistent with the practices of the Company and
Company Bank as of the date hereof.
(b) Any Indemnified Party wishing to claim indemnification
under Section 5.7(a), upon learning of any such claim, action, suit,
proceeding or investigation, shall as promptly as possible notify the
Acquiror thereof, but the failure to so notify shall not relieve the
Acquiror of any liability it may have to such Indemnified Party if such
failure does not materially prejudice the indemnifying party. In the event
of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Acquiror shall have
the right to assume the defense thereof and the Acquiror shall not be
liable to such Indemnified Parties for any legal expenses of other counsel
or any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if the Acquiror elects not
to assume such defense or counsel for the Indemnified Parties advises that
there are issues which raise conflicts of interest between the Acquiror and
the Indemnified Parties or between one or more of the Indemnified Parties,
the Indemnified Parties may retain counsel satisfactory to them (subject to
42
the terms of any relevant directors' and officers' liability insurance
policy), and the Acquiror shall pay the reasonable fees and expenses of
such counsel for the Indemnified Parties in any jurisdiction; provided,
however that the Acquiror shall be obligated pursuant to this paragraph (b)
to pay for only one firm of counsel for all Indemnified Parties in any
jurisdiction unless the use of one counsel for such Indemnified Parties
would present such counsel with a conflict of interest in which case the
Acquiror shall pay the reasonable fees and expenses of the additional
counsel to the Indemnified Parties, (ii) the Indemnified Parties will
cooperate in the defense of any such matter and (iii) the Acquiror shall
not be liable for any settlement effected without its prior written
consent. The Acquiror shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law.
(c) For a period of at least three years after the Effective
Time, the Acquiror shall use all reasonable efforts to cause to be
maintained in effect the current policies of directors' and officers'
liability insurance maintained by the Company (provided that the Acquiror
may substitute therefor policies of comparable coverage by a comparably
rated insurance carrier with respect to claims arising from facts or events
which occurred before the Effective Time); provided, however, that in no
event shall the Acquiror be obligated to expend, in order to maintain or
provide insurance coverage pursuant to this Subsection 5.7(c), any amount
per annum in excess of the amount of the annual premiums paid as of the
date hereof by the Company for such insurance (the "Maximum Amount"). If
the amount of the annual premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, the Acquiror shall use all
reasonable efforts to maintain the most advantageous policies of directors'
and officers' insurance obtainable for an annual premium equal to the
Maximum Amount. Notwithstanding the foregoing, prior to the Effective
Time, the Acquiror may request the Company to, and the Company shall,
purchase insurance coverage, on such terms and conditions as shall be
acceptable to the Acquiror, extending for a period of three years the
Company's then-existing directors' and officers' liability insurance
coverage (covering past or future claims with respect to periods before the
Effective Time) and such coverage shall satisfy the Acquiror's obligations
under this Subsection (c).
43
Section 5.8. Publicity. The initial press release announcing
this Agreement shall be a joint press release and thereafter the Company
and the Acquiror shall consult with each other in issuing any press
releases or otherwise making any statements, public or otherwise, with
respect to the other or the transactions contemplated hereby and in making
any filings with any governmental entity or with any national securities
exchange with respect thereto.
Section 5.9. Proxy Statement. As soon as practicable after
the date hereof, the Company shall prepare a proxy statement for the
purpose of taking shareholder action on this Agreement (the "Proxy
Statement"), file the Proxy Statement with the SEC, respond to comments of
the staff of the SEC and promptly thereafter mail the Proxy Statement to
all holders of record (as of the applicable record date) of Shares. The
Company represents and covenants that the Proxy Statement and any amendment
or supplement thereto, at the date of mailing to shareholders of the
Company and the date of the meeting of the Company's shareholders to be
held in connection with the Merger, will comply with the Securities
Exchange Act and will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Acquiror shall cooperate with
the Company in the preparation of the Proxy Statement. If requested by the
Acquiror, the Company shall employ professional proxy solicitors to assist
it in contacting shareholders in connection with the vote on the Merger.
Section 5.10. Shareholders' Meeting. The Company shall take
all action necessary, in accordance with applicable law and its articles of
incorporation and by-laws, to convene a meeting of the holders of Shares as
promptly as practicable for the purpose of considering and taking action
required by this Agreement. Except as provided in the next sentence, the
board of directors of the Company shall recommend, at the meeting of
stockholders referred to in Section 5.9, that the holders of Shares vote in
favor of, and approve and adopt, this Agreement. The board of directors of
the Company may fail to make, or withdraw, modify or change, any such
recommendation only if after having consulted with and considered the
advice of the Company's board of director's independent outside counsel,
the board of directors of the Company has determined that it is necessary
in order to discharge the fiduciary duties of such directors under
applicable law.
Section 5.11. Notification of Certain Matters. The Company
shall give prompt notice to the Acquiror of any
44
material adverse change in the financial condition, properties, business or
results of operations of the Company and the Company Subsidiaries taken as
a whole or the occurrence of any event which, so far as reasonably can be
foreseen at the time of its occurrence, is reasonably likely to result in a
Material Adverse Effect. Each of the Company and the Acquiror shall give
prompt notice to the other party of any notice or other communication from
any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this
Agreement.
Section 5.12. Tax Matters. The Company shall keep the
Acquiror fully apprised of its progress in the preparation of its income
and franchise tax returns and the income and franchise tax returns of the
Company Subsidiaries and shall provide to the Acquiror copies of draft
returns prior to filing. In addition, the Company agrees that it shall
consult with the Acquiror prior to making any significant decisions with
respect to tax reporting or other tax matters, in order to ensure to the
extent possible that such decisions are consistent with the consummation of
the transactions contemplated hereby. The Company and the Company
Subsidiaries will not, without the prior written consent of Acquiror, which
consent will not be unreasonably withheld, make any tax election or settle
or compromise any material federal, state, local or foreign income tax
liability. The Company and the Company Subsidiaries shall cooperate with
the Acquiror and its subsidiaries in the filing of all information returns
and employment tax returns required to be filed for the year in which the
Merger occurs. The Company and the Company Subsidiaries shall
(i) obtain a new EIN number, (ii) file all such forms, reports, and
information as may be necessary or required by the Internal Revenue Service
to clarify that the Company was a new corporation for tax purposes as of
August 19, 1993, and (iii) use all reasonable efforts to have the Internal
Revenue Service confirm in writing that no income tax liability of the
Company and the Company Subsidiaries for the period through August 18, 1993
will be collected from the Company or the Company Subsidiaries.
Section 5.13. Assistance Agreement. The Company shall keep
the Acquiror fully apprised of any changes with respect to Shared Loss
Assets, aggregate Net Charge-Offs, aggregate Reimbursable Expenses and
aggregate Charge-Offs with respect to Bulk Sales during the Bulk Sale
Period. The Company shall manage all Shared Loss Assets, and make all
filings with the FDIC, in compliance with the Assistance Agreement
(including Exhibit 2.2 thereto and the Examination Criteria (as defined
therein)) in all material respects so
45
that they remain eligible for shared loss payments as provided therein and
shall operate in all other respects in full compliance with the Assistance
Agreement. The Company shall not allow the Company Bank to enter into any
amendment, or to request any waiver, of the terms of the Assistance
Agreement without the prior written consent of the Acquiror.
Section 5.14. Advisory Board. The Acquiror shall, promptly
following the Effective Time, cause all of the non-officer members of the
Company's board of directors as of the date of this Agreement who are
willing to so serve to be elected or appointed as members of the Acquiror's
advisory board (the "Advisory Board"), the function of which shall be to
advise the Acquiror with respect to deposit and lending activities in the
Company's former market area and to maintain and develop customer
relationships. The members of the Advisory Board who are willing to so
serve shall be elected to serve an initial term of five years beginning on
the Closing Date. The Acquiror agrees to re-elect or re-appoint each of
the initial members of the Advisory Board to a second five-year term upon
the completion of the initial five year term. Each member of the Advisory
Board shall receive an annual retainer fee for such service at an annual
rate of $35,000, payable in monthly installments or in one lump sum at any
time in advance at the option of the Acquiror. In addition, each member of
the Advisory Board shall, as of the Effective Time, be granted pursuant to
the Acquiror's Long Term Incentive Stock Plan a one-time grant of 2,500
shares of the Acquiror's common stock, par value $5.00 per share, 20% of
which shares shall be immediately vested and nonforfeitable, an additional
20% of such shares shall vest and become nonforfeitable on each of the next
four anniversaries of the Closing Date during which the individual is a
member of the Advisory Board. Prior to the vesting dates of any such
shares granted to an Advisory Board member, the Acquiror shall have the
right, at any time to terminate the grant of any such shares to any
Advisory Board member and pay such Advisory Board member an amount equal to
the market value of such shares at the time the Acquiror notified such
Advisory Board member of the Acquiror's exercise of its termination rights.
"Market value", for purposes of the preceding sentence, means the average
of the high and low sales prices of such shares on the New York Stock
Exchange on the trading day immediately preceding the date of the
Acquiror's notice of exercise. All shares not previously vested shall
become vested and nonforfeitable upon the death or disability of an
Advisory Board member. If any Advisory Board member ceases to be a member
of the Advisory Board prior to full vesting of such
46
shares, any unvested shares shall be forfeited and returned to the
Acquiror.
ARTICLE VI. CONDITIONS TO CONSUMMATION
Section 6.1. Conditions to All Parties' Obligations. The
respective obligations of the Acquiror, Merger Sub (when duly incorporated)
and the Company to effect the Merger shall be subject to the satisfaction
or waiver prior to the Effective Time of the following conditions:
(a) The Agreement and the transactions contemplated hereby
shall have been approved and adopted by the requisite vote of the
shareholders of the Company in accordance with the DGCL.
(b) All necessary regulatory approvals, consents and waivers
with respect to the Agreement and the transactions contemplated
hereby shall have been received, and all applicable statutory waiting
periods shall have expired; and the parties shall have procured all
other regulatory approvals, consents or waivers of governmental
authorities or other persons that, in the opinion of counsel for the
Acquiror and the Company, are necessary or appropriate to the
consummation of the transactions contemplated by the Agreement;
provided, however, that no approval, consent or waiver referred to in
this Section 6.1(b) shall be deemed to have been received if it shall
include any condition or requirement that, individually or in the
aggregate, would reasonably be expected to (i) result in a Material
Adverse Effect on the Company or the Acquiror or (ii) reduce the
benefits of the transactions contemplated by the Agreement to the
Acquiror in so significant a manner that the Acquiror, in its good
faith reasonable judgment, would not have entered into this Agreement
had such condition or requirement been known at the date hereof.
(c) All other requirements prescribed by law which are
necessary to the consummation of the transactions contemplated by
this Agreement shall have been satisfied.
(d) No party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger, the Bank Merger
or any other transaction contemplated by this Agreement, and no
litigation or proceeding shall be pending against
47
the Acquiror or the Company or any of their subsidiaries brought by
any governmental agency seeking to prevent consummation of the
transactions contemplated hereby.
(e) No statute, rule, regulation, order, injunction or decree
shall have been enacted, entered, promulgated, interpreted, applied
or enforced by any governmental authority which prohibits, restricts
or makes illegal consummation of the Merger, the Bank Merger or any
other transaction contemplated by this Agreement.
Section 6.2. Conditions to the Obligations of the Acquiror.
The obligations of the Acquiror and Merger Sub to effect the Merger shall
be subject to the satisfaction or waiver prior to the Effective Time of the
following additional conditions:
(a) Each of the representations and warranties of the Company
contained in this Agreement and the Option Agreement shall have been
true and correct (subject to Section 3.1 and 3.2) on the date hereof
and shall be true and correct (subject to Section 3.1 and 3.2) on the
Closing Date as if made on such date (or on the date when made in the
case of any representation or warranty which specifically relates to
an earlier date); the Company shall have performed, in all material
respects, each of its covenants and agreements contained in this
Agreement and the Option Agreement; and the Acquiror shall have
received a certificate signed by the Chief Executive Officer and the
Chief Financial Officer of the Company, dated the Closing Date, to
the foregoing effect.
(b) The Acquiror shall have received from the Company's
independent certified public accountants "cold comfort" or agreed
upon procedures letters dated (i) the date of the mailing of the
Proxy Statement to the Company's shareholders and (ii) shortly prior
to the Closing Date, with respect to certain financial information
regarding the Company in the form customarily issued by such
accountants at such time in transactions of this type.
(c) The Company Bank shall have received the FDIC Letter dated
within 30 days prior to the Closing Date and reflecting information
as of the most recent month end preceding the Closing Date. The
amount of Net Charge-Offs plus Reimbursable Expenses identified as
being disputed in the FDIC Letter which remain
48
unresolved as of the Closing Date shall not exceed $10,000,000.
(d) As of the end of the month ending immediately prior to
the Closing Date, the Company shall have a Net Worth equal to, or
greater than, the Net Worth Threshold and, as of the Closing Date,
the Company shall have no basis to believe that the Net Worth, as of
the Closing Date, is less than the Net Worth Threshold. "Net Worth"
shall mean consolidated stockholders' equity calculated in accordance
with generally accepted accounting principles; provided that for
purposes of such calculation the FASB 115 adjustment shall be equal
to a negative $4,089,000. "Net Worth Threshold" shall mean
$350,000,000 minus the absolute value of any negative effects on the
Company's Net Worth arising solely from actions taken in compliance
with a written request of the Acquiror. The Acquiror shall have
received a certificate signed by the Chief Executive Officer and
Chief Financial Officer of the Company, dated the Closing Date, to
the foregoing effect.
(e) Neither the United States Treasury Department nor the
Internal Revenue Service will have issued or modified any ruling or
regulation nor will any statement have been made by any responsible
person which, if applied to the Company or the Company Subsidiaries
(as so modified), would impose liability on the Company or the
Company Subsidiaries for income taxes in respect of the period prior
to August 19, 1993, whether on account of the receipt of Federal
financial assistance or otherwise; provided, that, this condition
shall be satisfied if the Company shall have finally paid or
satisfied, for less than $12,000,000, all taxes due or that may be
due (including interest or penalties) with respect to the Company or
the Company Subsidiaries in respect of the period prior to August 19,
1993.
Section 6.3. Conditions to the Obligation of the Company. The
obligation of the Company to effect the Merger shall be subject to the
satisfaction or waiver prior to the Effective Time of the following
additional condition:
Each of the representations, warranties and covenants of the
Acquiror contained in this Agreement shall have been true and correct
(subject to Sections 3.1 and 3.2) on the date hereof and shall be
true and correct (subject to Sections 3.1 and 3.2) on the Closing
Date as if made on such date (or on the
49
date when made in the case of any representation or warranty which
specifically relates to an earlier date); the Acquiror shall have
performed, in all material respects, each of its covenants and
agreements contained in this Agreement; and the Company shall have
received certificates signed by the Chief Executive Officer and the
Chief Financial Officer of the Acquiror, dated the Closing Date, to
the foregoing effect.
ARTICLE VII. TERMINATION
Section 7.1. Termination. This Agreement may be terminated,
and the Merger abandoned, prior to the Effective Time, either before or
after its approval by the shareholders of the Company and by the Acquiror:
(a) by the mutual consent of the Acquiror and the Company, if
the board of directors of each so determines by vote of a majority of
the members of its entire board;
(b) by the Acquiror or the Company, if its board of directors
so determines by vote of a majority of the members of its entire
board, in the event of (i) the failure of the shareholders of the
Company to approve the Agreement at the meeting called to consider
such approval or (ii) a material breach by the other party hereto of
any representation, warranty, covenant or agreement contained herein
(or, in the case of the Company, in the Option Agreement) which is
not cured or not curable within 30 days after written notice of such
breach is given to the party committing such breach by the other
party;
(c) by the Acquiror or the Company by written notice to the
other party if either (i) any approval, consent or waiver of a
governmental authority required to permit consummation of the
transactions contemplated hereby shall have been denied or (ii) any
governmental authority of competent jurisdiction shall have issued a
final, unappealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated by this Agreement;
(d) by the Acquiror or the Company, if its board of directors
so determines by vote of a majority of the members of its entire
board, in the event that the Merger is not consummated by July 31,
1996, unless the failure to so consummate by such time is due to the
50
breach of any representation, warranty or covenant contained in this
Agreement by the party seeking to terminate; or
(e) by the Acquiror if the Company takes, causes to be taken
or allows to be taken any action that, without giving effect to the
proviso in the first sentence in Section 5.1 regarding the exercise
by the Company's board of directors of its fiduciary duties, would
otherwise be prohibited under Section 5.1.
The Acquiror shall not have the right to terminate this
Agreement prior to July 31, 1996 because of the failure of the Company to
satisfy the condition set forth in Section 6.2(c).
Section 7.2. Effect of Termination. In the event of the
termination of this Agreement by either the Acquiror or the Company, as
provided above, this Agreement shall thereafter become void and, subject to
the provisions of Section 8.2, there shall be no liability on the part of
any party hereto or their respective officers or directors, except that any
such termination shall be without prejudice to the rights of any party
hereto arising out of (a) the willful breach by any other party of any
covenant contained in this Agreement or (b) any willful misrepresentation
contained in this Agreement.
ARTICLE VIII. OTHER MATTERS
Section 8.1. Interpretation. When a reference is made in this
Agreement to Sections or Annexes, such reference shall be to a Section of,
or Annex to, this Agreement unless otherwise indicated. The table of
contents, tie sheet and headings contained in this Agreement are for ease
of reference only and shall not affect the meaning or interpretation of
this Agreement. Whenever the words "include", "includes", or "including"
are used in this Agreement, they shall be deemed followed by the words
"without limitation". Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular. In determining
whether there exists or has occurred a Material Adverse Effect under this
Agreement, no consideration shall be given to any of the conditions set
forth in Article VI.
Section 8.2. Survival. Only the agreements and covenants of
the Acquiror contained in Sections 5.3, 5.7 and 5.14 shall survive the
Effective Time. All other representations, warranties, agreements and
covenants shall be deemed to be conditions of the Agreement and shall not
51
survive the Effective Time. If the Agreement shall be terminated, the
agreements of the parties in the second, third and fourth sentences of
Section 5.4(a) and in Section 8.6 shall survive such termination.
Section 8.3. Waiver. Prior to the Effective Time, any
provision of this Agreement may be: (i) waived in writing by the party
benefitted by the provision or (ii) amended by an agreement in writing
between the parties hereto approved by their respective boards of
directors, except that, after the vote by the shareholders of the Company,
no amendment may be made that would contravene any provision of the DGCL.
Section 8.4. Counterparts. This Agreement may be executed in
counterparts each of which shall be deemed to constitute an original, but
all of which together shall constitute one and the same instrument.
Section 8.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 8.6. Expenses. Each party hereto will bear all
expenses incurred by it in connection with this Agreement and the trans-
actions contemplated hereby.
Section 8.7. Notices. All notices, requests, acknowledgements
and other communications hereunder to a party shall be in writing and shall
be deemed to have been duly given when delivered by hand, telecopy,
telegram or telex (confirmed in writing) to such party at its address set
forth below or such other address as such party may specify by notice to
the other party hereto.
If to the Company, to:
Brooklyn Bancorp, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
Chairman and
Chief Executive Officer
52
With copies to:
Xxxx X. Xxxxxxx, Esq.
Executive Vice President and General Counsel
Brooklyn Bancorp, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Xxxxxxx X. XxXxxxxxxx, Esq.
Xxxxxxx Xxxxxxxx & Wood
Two Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
If to the Acquiror, to:
Republic New York Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Xx.
Xxxx Xxx
With copies to:
H. Xxxxxx Xxxxx
Xxxx X. Xxxxxxx
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Section 8.8. Entire Agreement; Etc. This Agreement, together
with the Option Agreement, represents the entire understanding of the
parties hereto with reference to the transactions contemplated hereby and
supersedes any and all other oral or written agreements heretofore made,
including the Agreement dated August 8, 1995 between the Acquiror and the
Company, which shall no longer have any force or effect. All terms and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Except for the terms of Sections 5.3(d) and (e), 5.7 and 5.14, nothing in
this Agreement is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 8.9. Assignment. This Agreement may not be assigned
by any party hereto without the written consent
53
of the other parties and any purported assignment in contravention of the
foregoing shall be null and void.
Section 8.10. Captions. The Article, Section and paragraph
captions herein are for convenience of reference only, do not constitute
part of this Agreement and shall not be deemed to limit or otherwise affect
any of the provisions hereof.
54
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the day
and year first above written.
REPUBLIC NEW YORK CORPORATION
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Vice Chairman & President
LRNY INCORPORATED
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Vice Chairman & President
BROOKLYN BANCORP, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman & CEO
Annex 1
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of September 23, 1995 (this
"Agreement"), between Republic New York Corporation, a Maryland corporation
("Grantee"), and Brooklyn Bancorp, Inc., a Delaware corporation ("Issuer").
WITNESSETH:
WHEREAS, Grantee and Issuer are entering into an Agreement and
Plan of Merger, dated as of the date hereof (the "Plan"), which is being
executed by the parties hereto simultaneously with the execution of this
Agreement; and
WHEREAS, as a condition and inducement to Grantee's entering
into the Plan and in consideration therefor, Issuer has agreed to grant
Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements set forth herein and in the Plan, the
parties hereto agree as follows:
SECTION 1. Grant; Option Price. Issuer hereby grants to
Grantee an irrevocable option (the "Option") to purchase, subject to the
terms hereof, up to 2,388,000 fully paid and nonassessable shares of Common
Stock, par value $0.01 per share ("Common Stock"), of Issuer at a price of
$34.50 per share (the "Option Price"); provided, however, that each time
Issuer issues or agrees to issue (other than pursuant to options or
warrants to issue Common Stock in effect as of the date hereof) any shares
of Common Stock at a price less than the then current Option Price, the
then current Option Price shall be reduced to equal such lesser price. The
number of shares of Common Stock that may be received upon the exercise of
the Option and the Option Price are also subject to adjustment as set forth
in Section 5.
SECTION 2. Exercise and Termination. (a) Grantee may
exercise the Option, in whole or part, at any time and from time to time
following the occurrence of a Purchase Event (as defined below); provided
that the Option shall terminate and be of no further force and effect upon
the earliest to occur of (i) the time immediately prior to the Effective
Time, (ii) 12 months after the first occurrence of a Preliminary Purchase
Event, except that it shall be 18 months following the Preliminary Purchase
Event (as defined below) if it is described in Section 2(b)(i) hereof, or
(iii) 12 months after the date hereof if there
2
has been no occurence of a Purchase Event or a Preliminary Purchase Event.
The events described in clauses (i) - (iii) in the preceding sentence are
hereinafter collectively referred to as an "Exercise Termination Event".
(b) The term "Preliminary Purchase Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i) Issuer or XxxxxXxxx Federal Savings Bank (the "Company
Bank") without having received Grantee's prior written consent, shall
have entered into an agreement to engage in an Acquisition
Transaction (as defined below) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "Securities Exchange Act"), and the rules and
regulations thereunder) other than Grantee or any of its subsidiaries
(each a "Grantee Subsidiary") or the Board of Directors of Issuer
shall have recommended that the shareholders of Issuer approve or
accept any Acquisition Transaction with any person other than Grantee
or any Grantee Subsidiary. For purposes of this Agreement,
"Acquisition Transaction" shall mean (x) a merger or consolidation,
or any similar transaction, involving Issuer or the Company Bank, (y)
a purchase, lease or other acquisition of all or substantially all of
the assets of Issuer or the Company Bank or (z) a purchase or other
acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% or more of the
voting power of Issuer or the Company Bank; provided that the term
"Acquisition Transaction" does not include any internal merger or
consolidation involving only Issuer or the Company Bank and any
subsidiary of Issuer;
(ii) Any person (other than Grantee or any Grantee Subsidiary)
shall have acquired beneficial ownership or the right to acquire
beneficial ownership of Common Stock representing 10% or more of the
voting power of the Issuer or the Company Bank (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned
thereto in Section 13(d) of the Securities Exchange Act and the rules
and regulations issued thereunder);
(iii) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders,
by public announcement or
3
written communication that is or becomes the subject of public
disclosure, to engage in an Acquisition Transaction (including any
situation in which any person other than Grantee or any subsidiary of
Grantee shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to, a tender offer or exchange offer to purchase any
shares of Common Stock such that, upon consummation of such offer,
such person would own or control Common Stock representing 10% or
more of the voting power of the Issuer or the Company Bank (such an
offer being referred to herein as a "Tender Offer" or an "Exchange
Offer", respectively));
(iv) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer shall
have breached any covenant or obligation contained in the Plan and
such breach would entitle Grantee to terminate the Plan or the
holders of Common Stock shall not have approved the Plan at the
meeting of such stockholders held for the purpose of voting on the
Plan, such meeting shall not have been held or shall have been
canceled prior to termination of the Plan or Issuer's Board of
Directors shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors with
respect to the Plan; or
(v) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has
given its prior written consent, shall have filed an application or
notice with any governmental authority or regulatory or
administrative agency or commission (each, a "Governmental
Authority") for approval to engage in an Acquisition Transaction.
(c) The term "Purchase Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person other than Grantee or any
Grantee Subsidiary of beneficial ownership of Common Stock
representing 25% or more of the voting power of Issuer or the Company
Bank; or
(ii) The occurrence of a Preliminary Purchase Event described in
Section 2(b)(i) except that the percentage referred to in clause (z)
shall be 25%.
4
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event; provided,
however, that the giving of such notice by Issuer shall not be a condition
to the right of Grantee to exercise the Option.
(e) In the event that Grantee is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the "Option
Notice" and the date of which being hereinafter referred to as the "Notice
Date") specifying (i) the total number of shares of Common Stock it will
purchase pursuant to such exercise, (ii) the time (which shall be on a
business day that is not less than three nor more than thirty business days
from the Notice Date) on which the closing of such purchase shall take
place (the "Closing Date") and (iii) a place at which the closing of such
purchase shall take place; provided, that, if prior notification to or
approval of any Governmental Authority is required in connection with such
purchase (each, a "Notification" or an "Approval," as the case may be),
(a) Grantee shall promptly file the required notice or application for
approval ("Notice/Application"), (b) Grantee shall expeditiously process
the Notice/Application and (c) for the purpose of determining the Closing
Date pursuant to clause (ii) of this sentence, the period of time that
otherwise would run from the Notice Date shall instead run from the later
of (x) in connection with any Notification, the date on which any required
notification periods have expired or been terminated and (y) in connection
with any Approval, the date on which such approval has been obtained and
any requisite waiting period or periods shall have expired. For purposes
of Section 2(a), any exercise of the Option shall be deemed to occur on the
Notice Date relating thereto. On or prior to the Closing Date, Grantee
shall have the right to revoke its exercise of the Option in the event that
the transaction constituting a Purchase Event that gives rise to such right
to exercise shall not have been consummated.
(f) At the closing referred to in Section 2(e), Grantee shall
pay to Issuer the aggregate purchase price for the shares of Common Stock
specified in the Option Notice in immediately available funds by wire
transfer to a bank account designated by Issuer; provided, however, that
failure or refusal of Issuer to designate such a bank account shall not
preclude Grantee from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in Section 2(f), Issuer shall
deliver to Grantee a certificate
5
or certificates representing the number of shares of Common Stock specified
in the Option Notice and, if the Option should be exercised in part only, a
new Option evidencing the rights of Grantee thereof to purchase the balance
of the shares of Common Stock purchasable hereunder.
(h) Certificates for Common Stock delivered at a closing
hereunder shall be endorsed with a restrictive legend substantially as
follows:
The transfer of the shares represented by this
certificate is subject to resale restrictions arising
under the Securities Act of 1933, as amended, and
applicable state securities laws and to certain provi-
sions of a Stock Option Agreement between Republic New
York Corporation and Brooklyn Bancorp, Inc. ("Issuer"),
dated as of September 23, 1995. A copy of such agreement
is on file at the principal office of Issuer and will be
provided to the holder hereof without charge upon receipt
by Issuer of a written request therefor.
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act and applicable state securities laws in
the above legend shall be removed by delivery of substitute certificate(s)
without such reference if Grantee shall have delivered to Issuer a copy of
a letter from the staff of the Securities and Exchange Commission (the
"SEC") and a letter from any Governmental Authority responsible for
administering any applicable state securities laws, or, in lieu of the
foregoing, an opinion of counsel, in form and substance satisfactory to
Issuer, to the effect that such legend is not required for purposes of the
Securities Act and applicable state securities laws; (ii) the reference to
the provisions of this Agreement in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if the shares
have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required
by law.
(i) Upon the giving by Grantee to Issuer of an Option Notice
and the tender of the applicable purchase price in immediately available
funds on the Closing Date, Grantee shall be deemed to be the holder of
record of the
6
number of shares of Common Stock specified in the Option Notice,
notwithstanding that the stock transfer books of Issuer shall then be
closed or that certificates representing such shares of Common Stock shall
not then actually be delivered to Grantee. Issuer shall pay all expenses
and any and all United States federal, state and local taxes and other
charges that may be payable in connection with the preparation, issue and
delivery of stock certificates under this Section 2 in the name of Grantee.
SECTION 3. Reservation of Common Stock; Regulatory Compliance.
Issuer agrees: (i) that it shall at all times until the termination of
this Agreement have reserved for issuance upon the exercise of the Option
that number of authorized and reserved shares of Common Stock equal to the
maximum number of shares of Common Stock at any time and from time to time
issuable hereunder, all of which shares will, upon issuance pursuant
hereto, be duly authorized, validly issued, fully paid, nonassessable, and
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights; (ii) that it will not,
by amendment of its certificate of incorporation or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other
voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to
time be required (including (x) complying with all premerger notification,
reporting and waiting period requirements specified in 15 U.S.C. sec. 18a
and regulations promulgated thereunder and (y) in the event, under the Home
Owners' Loan Act, as amended ("HOLA") the Bank Holding Company Act of 1956,
as amended ("BHC Act"), or the Change in Bank Control Act of 1978, as
amended, or any state banking law, prior approval of or notice to any
Governmental Authority is necessary before the Option may be exercised,
cooperating with Grantee in preparing such applications or notices and
providing such information to each such Governmental Authority as it may
require) in order to permit Grantee to exercise the Option and Issuer duly
and effectively to issue shares of Common Stock pursuant hereto; and
(iv) to take all action provided herein to protect the rights of Grantee
against dilution.
SECTION 4. Exchange. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Grantee, upon
presentation and surrender of this Agreement at the principal office of
Issuer, for other agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same terms
7
and subject to the same conditions as are set forth herein, in the
aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any agreements
and related options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer,
whether or not the Agreement so lost, stolen, destroyed or mutilated shall
at any time be enforceable by anyone.
SECTION 5. Adjustment. The number of shares of Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment
from time to time as follows:
(a) In the event of any change in the Common Stock by reason
of stock dividends, split-ups, mergers, recapitalizations,
combinations, subdivisions, conversions, exchanges of shares or the
like, the type and number of shares of Common Stock purchasable upon
exercise hereof shall be appropriately adjusted and proper provision
shall be made so that, in the event that any additional shares of
Common Stock are to be issued or otherwise to become outstanding as a
result of any such change (other than pursuant to an exercise of the
Option), the number of shares of Common Stock that remain subject to
the Option shall be increased so that, after such issuance and
together with shares of Common Stock previously issued pursuant to
the exercise of the Option (as adjusted on account of any of the
foregoing changes in the Common Stock), it equals 19.9% of the number
of shares of Common Stock then issued and outstanding.
(b) Whenever the number of shares of Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the
Option Price shall be adjusted by multiplying the Option Price by a
fraction, the numerator of which shall be equal to the number of
shares of Common Stock purchasable prior to the adjustment and the
denominator of which shall be equal to the number of shares of Common
Stock purchasable after the adjustment. If the Option Price
adjustment contained in the proviso in Section 1 is applicable to any
particular issuance of Common Stock, such Option Price
8
adjustment shall be applied to further decrease the Option Price.
SECTION 6. Registration Rights. (a) Upon the occurrence of a
Purchase Event that occurs prior to an Exercise Termination Event, Issuer
shall, at the request of Grantee (whether on its own behalf or on behalf of
any subsequent holder of the Option (or part thereof) or any of the shares
of Common Stock issued pursuant hereto), promptly prepare, file and keep
current a registration statement under the Securities Act covering any
shares issued and issuable pursuant to the Option and shall use its best
efforts to cause such registration statement to become effective, and to
remain current and effective for a period not in excess of 180 days from
the day such registration statement first becomes effective, in order to
permit the sale or other disposition of any shares of Common Stock issued
upon total or partial exercise of the Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee; provided,
however, that Issuer may postpone filing a registration statement relating
to a registration request by Grantee under this Section 6 for a period of
time (not in excess of 30 days) if in its judgment such filing would
require the disclosure of material information that Issuer has a bona fide
business purpose for preserving as confidential. Grantee shall have the
right to demand two such registrations. The foregoing notwithstanding, if,
at the time of any request by Grantee for registration of Option Shares as
provided above, Issuer is in the process of registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good
faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offering
or inclusion of the Option Shares would interfere materially with the
successful marketing of the shares of Common Stock offered by Issuer, the
number of Option Shares otherwise to be covered in the registration
statement contemplated hereby may be reduced; provided, however, that after
any such required reduction the number of Option Shares to be included in
such offering for the account of Grantee shall constitute at least 33 1/3%
of the total number of shares of Grantee and Issuer covered in such
registration statement; provided further, however, that if such reduction
occurs, then Issuer shall file a registration statement for the balance as
promptly as practicable thereafter as to which no reduction pursuant to
this Section 6(a) shall be permitted or occur and the Grantee shall
thereafter be entitled to one additional registration statement. Grantee
shall provide all information reasonably requested by Issuer for inclusion
in any registration statement to be filed hereunder. In
9
connection with any such registration, Issuer and Grantee shall provide
each other with representations, warranties, indemnities and other
agreements customarily given in connection with such registrations. If
requested by Grantee in connection with such registration, Issuer and
Grantee shall become a party to any underwriting agreement relating to the
sale of such shares, but only to the extent of obligating themselves in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements. Notwithstanding the
foregoing, if Grantee revokes any exercise notice or fails to exercise any
Option with respect to any exercise notice pursuant to Section 2(e), Issuer
shall not be obligated to continue any registration process with respect to
the sale of Option Shares issuable upon the exercise of such Option and
Grantee shall not be deemed to have demanded registration of Option Shares.
(b) In the event that Grantee requests Issuer to file a
registration statement following the failure to obtain any approval
required to exercise the Option as described in Section 9, the closing of
the sale or other disposition of the Common Stock or other securities
pursuant to such registration statement shall occur substantially
simultaneously with the exercise of the Option.
SECTION 7. Optional Fees. (a) After the occurrence of a
Purchase Event described in Section 2(c)(ii) except that the percentage
referred to shall be 65% that occurs prior to an Exercise Termination Event
(the "Fee Trigger Event"), at the request of Grantee, Issuer shall pay to
Grantee $2 million in cash within 5 business days of such request (the "$2
Million Fee"). If Grantee makes such a request and the Issuer has made
such payment, Grantee's right to exercise this Option for Common Stock
shall terminate immediately. After the consummation of the transaction
giving rise to a Fee Trigger Event, at the request of Grantee, Issuer
shall repurchase the Option from Grantee (notwithstanding that it is not
then exercisable for shares of Common Stock) at a price (the "Option
Repurchase Price") equal to $15 million in cash less any $2 Million Fee
paid pursuant to the preceding sentence within 5 business days of such
request.
(b) Grantee may exercise its right to receive the $2 Million
Fee pursuant to this Section 7 by providing to Issuer, at its principal
office, a written notice to such effect. As promptly as practicable, and
in any event within five business days after the receipt of such notice
relating thereto, Issuer shall deliver or cause to be delivered to Grantee
the $2 million in cash. Grantee may exercise its
10
right to require Issuer to repurchase the Option pursuant to this Section 7
by surrendering for such purpose to Issuer, at its principal office, a copy
of this Agreement accompanied by a written notice stating that Grantee
elects to require Issuer to repurchase the Option in accordance with the
provisions of this Section 7. As promptly as practicable, and in any event
within five business days after the surrender of the Option and the receipt
of such notice relating thereto, Issuer shall deliver or cause to be
delivered to Grantee the Option Repurchase Price.
(c) Issuer shall not enter into any agreement with any party
(other than Grantee or a Grantee Subsidiary) for an Acquisition Transaction
unless the other party thereto assumes all the obligations of Issuer
pursuant to this Section 7 in the event that Grantee elects, in its sole
discretion, to require such other party to perform such obligations.
SECTION 8. Substitute Option. (a) In the event that prior to
an Exercise Termination Event, Issuer shall enter into an agreement (i) to
consolidate or merge with any person, other than Grantee or a Grantee
Subsidiary, and shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any person, other than Grantee
or a Grantee Subsidiary, to merge into Issuer and Issuer shall be the
continuing or surviving corporation, but, in connection with such merger,
the then outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any
other property or the then outstanding shares of Common Stock shall after
such merger represent less than 50% of the outstanding shares and share
equivalents of the merged company, or (iii) to sell or otherwise transfer
all or substantially all of its or any Issuer Subsidiary's assets to any
person, other than Grantee or a Grantee Subsidiary, then, and in each such
case, the agreement governing such transaction shall make proper provision
so that the Option shall, upon the consummation of such transaction and
upon the terms and conditions set forth herein, be converted into, or
exchanged for, an option (the "Substitute Option"), at the election of
Grantee, of either (x) the Acquiring Corporation (as defined below) or
(y) any person that controls the Acquiring Corporation (the Acquiring
Corporation and any such controlling person being hereinafter referred to
as the "Substitute Option Issuer").
(b) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as is hereinafter defined) as is
equal to the market/offer price (as defined below) multiplied by the number
of shares
11
of the Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as is hereinafter defined). The exercise
price of the Substitute Option per share of the Substitute Common Stock
(the "Substitute Option Price") shall then be equal to the Option Price
multiplied by a fraction in which the numerator is the number of shares of
Common Stock for which the Option was theretofore exercisable and the
denominator is the number of shares for which the Substitute Option is
exercisable.
(c) The Substitute Option shall otherwise have the same terms
as the Option, provided that if the terms of the Substitute Option cannot,
for legal reasons, be the same as the Option, such terms shall be as
similar as possible and in no event less advantageous to Grantee, and
provided further, however, that the terms of the Substitute Option shall
provide that Grantee shall have an immediate right to require the Issuer to
repurchase the Substitute Option pursuant to Section 7.
(d) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, and (iii) the transferee of all or
any substantial part of the Issuer's assets (or the assets of any
Issuer Subsidiary);
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the
Substitute Option;
(iii) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no
event higher than the closing price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common
stock issued by Issuer, the person merging into Issuer or by any
company which controls or is controlled by such merging person, as
Grantee may elect; and
(iv) The term "market/offer price" shall mean the highest of
(i) the price per share of Common Stock at
12
which a tender offer or exchange offer therefor has been made after
the date hereof, (ii) the price per share of Common Stock paid or to
be paid by any third party pursuant to an agreement with Issuer
(whether by way of a merger, consolidation or otherwise), (iii) the
highest last sale price for shares of Common Stock within the 360-day
period ending on the date in question which is reported by The Wall
Street Journal or, if not reported thereby, another authoritative
source, (iv) in the event of a sale of all or substantially all of
Issuer's assets, the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of Issuer
as determined by a nationally recognized independent investment
banking firm selected by Grantee or the Owner, as the case may be,
divided by the number of shares of Common Stock of Issuer outstanding
at the time of such sale. In determining the market/offer price, the
value of consideration other than cash shall be the value determined
by a nationally recognized independent investment banking firm
selected by Grantee or the Owner, as the case may be, whose
determination shall be conclusive and binding on all parties.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
aggregate of the shares of the Substitute Common Stock outstanding
immediately prior to the issuance of the Substitute Option. In the event
that the Substitute Option would be exercisable for more than 19.9% of the
aggregate of the shares of Substitute Common Stock but for this clause (e),
the Substitute Option Issuer shall make a cash payment to Grantee equal to
the excess of (i) the value of the Substitute Option without giving effect
to the limitation in this clause (e) over (ii) the value of the Substitute
Option after giving effect to the limitation in the clause (e). This
difference in value shall be determined by a nationally recognized
investment banking firm selected by Grantee and the Substitute Option
Issuer.
SECTION 9. Extension. Notwithstanding Sections 2, 6 and 7, if
Grantee has given the notice referred to in one or more of such Sections,
the exercise of the rights specified in any such Section shall be extended
(a) if the exercise of such rights requires obtaining regulatory approvals
(including any required waiting periods) to the extent necessary to obtain
all regulatory approvals for the exercise of such rights, and (b) to the
extent necessary to avoid liability under Section 16(b) of the Securities
Exchange Act by reason of such exercise; provided that in no event shall
any closing date occur more
13
than 18 months after the related Notice Date, and, if the closing date
shall not have occurred within such period due to the failure to obtain any
required approval by any Governmental Authority despite all reasonable
efforts of Issuer or the Substitute Option Issuer, as the case may be, to
obtain such approvals, the exercise of the Option shall be deemed to have
been rescinded as of the related Notice Date. In the event (a) Grantee
receives official notice that an approval of any Governmental Authority
required for the purchase and sale of the Option Shares will not be issued
or granted or (b) a closing date has not occurred within 18 months after
the related Notice Date due to the failure to obtain any such required
approval, Grantee shall be entitled to exercise the Option in connection
with the resale of the Option Shares pursuant to a registration statement
as provided in Section 6. Nothing contained in this Agreement shall
restrict Grantee from specifying alternative means of exercising rights
pursuant to Sections 2, 6 or 7 hereof in the event that the exercising of
any such rights shall not have occurred due to the failure to obtain any
required approval referred to in this Section 9.
SECTION 10. Representations and Warranties. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
approved by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This Agreement has been
duly executed and delivered by, and constitutes a valid and binding
obligation of, Issuer, enforceable against Issuer in accordance with its
terms, except as enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or injunc-
tive relief is subject to the discretion of the court before which any
proceeding may be brought; and
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the
date hereof through the termination of this Agreement in accordance with
its terms will have reserved for issuance upon the exercise of the Option,
that number of shares of Common Stock equal to the maximum
14
number of shares of Common Stock at any time and from time to time issuable
hereunder, and all such shares, upon issuance pursuant hereto, will be duly
authorized, validly issued, fully paid, non-assessable, and will be
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
SECTION 11. Assignment; Delegation. (a) Neither of the
parties hereto may assign any of its rights or delegate any of its obliga-
tions under this Agreement or the Option created hereunder to any other
person without the express written consent of the other party, except that
Grantee may assign this Agreement to a wholly owned subsidiary of Grantee
and Grantee may assign its rights hereunder in whole or in part after the
occurrence of a Preliminary Purchase Event; provided, however, that until
the date at which the Board of Governors of the Federal Reserve System
("FRB") has approved an application by Grantee under the BHC Act to acquire
the shares of Common Stock subject to the Option, Grantee may not assign
its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the
right to purchase in excess of 2% of the voting shares of Issuer, (iii) an
assignment to a single party (e.g., a broker or investment banker) for the
purpose of conducting a widely dispersed public distribution on Grantee's
behalf, or (iv) any other manner approved by the FRB. The term "Grantee"
as used in this Agreement shall also be deemed to refer to Grantee's per-
mitted assigns.
(b) Any assignment of rights of Grantee to any permitted
assignee of Grantee hereunder shall bear the restrictive legend at the
beginning thereof substantially as follows:
The transfer of the option represented by this assignment and
the related option agreement is subject to resale restrictions
arising under the Securities Act of 1933, as amended, and
applicable state securities laws and to certain provisions of a
Stock Option Agreement between Republic New York Corporation
and Brooklyn Bancorp, Inc. ("Issuer"), dated as of the
September 23, 1995. A copy of such agreement is on file at the
principal office of Issuer and will be provided to any
permitted assignee of the Option without charge upon receipt by
Issuer of a written request therefor.
It is understood and agreed that (i) the reference to the resale
restrictions of the Securities Act and applicable state securities laws in
the above legend shall be removed
15
by delivery of substitute assignments without such reference if Grantee
shall have delivered to Issuer a copy of a letter from the staff of the SEC
and a letter from any Governmental Authority responsible for administering
any applicable state securities laws, or, in lieu of the foregoing, an
opinion of counsel, in form and substance satisfactory to Issuer, to the
effect that such legend is not required for purposes of the Securities Act
and applicable state securities laws; (ii) the reference to the provisions
of this Agreement in the above legend shall be removed by delivery of
substitute assignments without such reference if the Option has been sold
or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference;
and (iii) the legend shall be removed in its entirety if the conditions in
the preceding clauses (i) and (ii) are both satisfied. In addition, such
assignments shall bear any other legend as may be required by law.
SECTION 12. Reasonable Efforts. Each of Grantee and Issuer
will use its reasonable efforts to make all filings with, and to obtain
consents of, all third parties and Governmental Authorities necessary to
the consummation of the transactions contemplated by this Agreement.
SECTION 13. Equitable Relief. The parties hereto acknowledge
that damages would be an inadequate remedy for a breach of this Agreement
by either party hereto and that the obligations of the parties shall hereto
be enforceable by either party hereto through injunctive or other equitable
relief. Both parties further agree to waive any requirement for the
securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any
other rights that the parties hereto may have for any failure to perform
this Agreement.
SECTION 14. Severability. If any term, provision, covenant or
restriction contained in this Agreement is held by a court or a federal or
state regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions and covenants and
restrictions contained in this Agreement shall remain in full force and
effect, and shall in no way be affected, impaired or invalidated. If for
any reason such court or regulatory agency determines that Grantee is not
permitted to acquire, or Issuer is not permitted to repurchase pursuant to
Section 7, the full number of shares of Common Stock provided in Sec-
tion 1(a) (as adjusted pursuant hereto), it is the express intention of
Issuer to allow Grantee to acquire or to require Issuer
16
to repurchase such lesser number of shares as may be permissible, without
any amendment or modification hereof.
SECTION 15. Notices. All notices, requests, claims, demands
and other communications hereunder shall be deemed to have been duly given
when delivered in person, by cable, telegram, telecopy or telex, or by
registered or certified mail (postage prepaid, return receipt requested) at
the respective addresses of the parties set forth in the Plan.
SECTION 16. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York.
SECTION 17. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement and shall be
effective at the time of execution.
SECTION 18. Expenses. Except as otherwise expressly provided
herein, each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its own
financial consultants, investment bankers, accountants and counsel.
SECTION 19. Entire Agreement. Except as otherwise expressly
provided herein or in the Plan, this Agreement contains the entire
agreement between the parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with
respect thereof, written or oral. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in
this Agreement, expressed or implied, is intended to confer upon any party,
other than the parties hereto, and their respective successors except as
assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
SECTION 20. Defined Terms. Capitalized terms used in this
Agreement and not defined herein but defined in the Plan shall have the
meanings assigned thereto in the Plan.
SECTION 21. Plan Breach. Nothing contained in this Agreement
shall be deemed to authorize Issuer or Grantee to breach any provision of
the Plan.
17
SECTION 22. Majority in Interest. In the event that any
selection or determination is to be made by Grantee or the Owner hereunder
and at the time of such selection or determination there is more than one
Grantee or Owner, such selection shall be made by a majority in interest of
such Grantees or Owners.
SECTION 23. Consummation. In the event of any exercise of the
option by Grantee, Issuer and such Grantee shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for
by such exercise.
SECTION 24. No Shareholder Rights. Except to the extent
Grantee exercises the Option, Grantee shall have no rights to vote or
receive dividends or have any other rights as a shareholder with respect to
shares of Common Stock covered hereby.
18
IN WITNESS WHEREOF, each of the parties has caused this Stock
Option Agreement to be executed on its behalf by their officers thereunto
duly authorized, all as of the date first above written.
REPUBLIC NEW YORK CORPORATION
By:
Name:
Title:
BROOKLYN BANCORP, INC.
By:
Name:
Title:
1
Annex 2
2. The FDIC is also prepared to provide you with a letter (the
"Subsequent Letter") on or before the closing date for the Transaction that
will include the information set forth below in subparagraphs A through D.
A. [As of the Determination Date, the Assistance Agreement has not
been amended (as contemplated by Section 6.6 of the Assistance
Agreement) except for Amendment No. 1 dated as of June 30, 1992, and
Amendment No. 2 dated as of June 13, 1995. No waivers with respect
to the Assistance Agreement (as contemplated by Section 6.10 of the
Assistance Agreement) have been issued by the FDIC except for the
letter dated October 12, 1993, from the FDIC to Xx. Xxxxxx X. Xxxxxx,
President and Chief Operating Officer of the Bank, and paragraph 1 of
the letter dated September __, 1995, from the FDIC to Xx. Xxxxxxx X.
Xxxxxxx, Chairman and Chief Executive Officer of the Bank.] [If any
other amendments or waivers are issued, this paragraph will be
revised to reflect them.]
B. Based on the FDIC's review of Quarterly Certificates and
Monthly Certificates submitted to the FDIC by the Bank in accordance
with the Assistance Agreement and paragraph 1 of the letter dated
September __, 1995, to our knowledge, as of the Determination Date
and subject to (1) the penultimate sentence of paragraph 1 of the
letter dated September __, 1995, (2) adjustment with respect to any
items in dispute, and (3) paragraph C hereof:
(i) the aggregate amount of Net Charge-Offs reflected in Quarterly
Certificates and Monthly Certificates for all Shared-Loss
Quarters from the Commencement Date to and including the
Shared-Loss Quarter immediately preceding the Shared-Loss
Quarter in which the Determination Date occurs is $ ________;
(ii) the aggregate amount of Reimbursement Expenses reflected in
Quarterly Certificates and Monthly Certificates for all Shared-
Loss Quarters from the Commencement Date to and including the
Shared-Loss Quarter immediately preceding the Shared-Loss
Quarter in which the Determination Date occurs is $ _______;
2
(iii) with respect to all Shared-Loss Quarters from the Commencement
Date to and including the Shared-Loss Quarter immediately
preceding the Shared-Loss Quarter in which the Determination
Date occurs, the FDIC has paid to the Bank (i) $ __________
with respect to Net Charge-Offs reflected in Quarterly
Certificates and Monthly Certificates for such period, and (ii)
$ ________ with respect to Reimbursable Expenses reflected in
Quarterly Certificates and Monthly Certificates for such
period;
(iv) with respect to that portion of the Shared-Loss Quarter in
which the Determination Date occurs, based on the Monthly
Certificate(s) dated ______, 19__ and ______, 19__, the FDIC
anticipates that it will pay to the Bank (i) $ _______ with
respect to Net Charge-Offs reflected in such Monthly
Certificate(s), and (ii) $ _______ with respect to Reimbursable
Expenses reflected in such Monthly Certificate(s);
(v) the Initial Threshold Quarter [has not occurred as of the
Determination Date] [was the Shared-Loss Quarter ending on
_______, 19__].
(iv) based on the Quarterly Certificates and the Monthly Certificate
for the period from the Commencement Date to and including the
Determination Date, the aggregate amount of losses constituting
Charge-Offs with respect to Bulk Sales during such period is
$ _______;
(vii) the Successor Bulk Sale Amount would be $ _______ if calculated
as of the Determination Date; and
(viii) the Bank has acted in accordance with the Assistance Agreement,
except to the extent that has been or may be noted in FDIC
correspondence to the Bank or in any audit conducted by the
Office of the Inspector General.
C. Based on the FDIC's review of Quarterly Certificates and
Monthly Certificates during the period from the Commencement Date to and
including the Determination Date, to our knowledge, the FDIC in accordance
with the Assistance Agreement has identified to the Bank in correspondence
certain items in dispute, if any, during the period from the Commencement
Date to and including the Determination Date. A list of such
correspondence is provided as Attachment A hereto. Identification of such
3
items in dispute neither precludes the FDIC from determining at any time
that other items also may be in dispute and requiring corrective action
with respect thereto, nor affects the Office of the Inspector General in
carrying out its statutory responsibility to conduct audits of the
Assistance Agreement. Nothing in this letter shall be construed as
requiring that any or all such items in dispute be resolved as of the
Determination Date or any other date.
D. To the best of our knowledge, as of the Determination Date, any
tax claims against XxxxxXxxx Savings, FSB, New York (Brooklyn), New York
and its subsidiaries made by the State of New York or the City of New York
for taxes, interest, penalties and fines arising only out of the tax years
1985, 1986, 1987 and 1988, have been fully settled, discharged and paid.
