EXHIBIT 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER
Between
DIME COMMUNITY BANCSHARES, INC.
and
FINANCIAL BANCORP, INC.
Dated as of July 18, 1998
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
THE MERGER
1.1 The Merger..............................................................1
1.2 Effective Time..........................................................2
1.3 Effects of the Merger...................................................2
1.4 Conversion of Company Common Stock......................................2
1.5 Election Procedures.....................................................4
1.6 Stock Options...........................................................7
1.7 Parent Common Stock.....................................................9
1.8 Shares of Dissenting Stockholders.......................................9
1.9 Tax Opinion Adjustment.................................................10
1.10 Certificate of Incorporation...........................................10
1.11 By-Laws................................................................10
1.12 Directors and Officers.................................................10
1.13 Tax Consequences.......................................................10
1.14 Bank Merger............................................................10
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available........................................11
2.2 Exchange of Shares.....................................................11
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules...................................................14
3.2 Standards..............................................................14
Page
----
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Corporate Organization.................................................15
4.2 Capitalization.........................................................16
4.3 Authority; No Violation................................................17
4.4 Consents and Approvals.................................................18
4.5 Reports................................................................19
4.6 Financial Statements...................................................19
4.7 Broker's Fees..........................................................20
4.8 Absence of Certain Changes or Events...................................21
4.9 Legal Proceedings......................................................21
4.10 Taxes..................................................................22
4.11 Employees..............................................................23
4.12 SEC Reports............................................................24
4.13 Company Information....................................................25
4.14 Compliance with Applicable Law.........................................25
4.15 Certain Contracts......................................................25
4.16 Agreements with Regulatory Agencies....................................26
4.17 Environmental Matters..................................................27
4.18 Opinion................................................................28
4.19 Approvals..............................................................28
4.20 Loan Portfolio.........................................................28
4.21 Property...............................................................30
4.22 Reorganization.........................................................30
4.23 Antitakeover Provisions Inapplicable...................................30
4.24 Insurance..............................................................30
4.25 Investment Securities; Borrowings; Deposits............................31
4.26 Indemnification........................................................32
4.27 Liquidation Account....................................................32
4.28 Year 2000 Matters......................................................32
Page
----
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
5.1 Corporate Organization.................................................32
5.2 Capitalization.........................................................33
5.3 Authority; No Violation................................................35
5.4 Consents and Approvals.................................................35
5.5 Reports................................................................36
5.6 Financial Statements...................................................36
5.7 Broker's Fees..........................................................37
5.8 Absence of Certain Changes or Events...................................37
5.9 Legal Proceedings......................................................37
5.10 Taxes..................................................................38
5.11 Employees..............................................................38
5.12 SEC Reports............................................................40
5.13 Parent Information.....................................................40
5.14 Compliance with Applicable Law.........................................40
5.15 Ownership of Company Common Stock; Affiliates and Associates...........41
5.16 Agreements with Regulatory Agencies....................................41
5.17 Environmental Matters..................................................41
5.18 Opinion................................................................42
5.19 Approvals..............................................................42
5.20 Loan Portfolio.........................................................43
5.21 Property...............................................................43
5.22 Reorganization.........................................................44
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company...............................................44
6.2 Covenants of Parent....................................................52
Page
----
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters.....................................................53
7.2 Access to Information..................................................54
7.3 Stockholder Meeting....................................................55
7.4 Legal Conditions to Merger.............................................55
7.5 Affiliates.............................................................55
7.6 Stock Exchange Listing.................................................56
7.7 Employee Benefit Plans; Existing Agreements............................56
7.8 Indemnification........................................................59
7.9 Additional Agreements..................................................60
7.10 Coordination of Dividends..............................................61
7.11 Parent Rights Agreement................................................61
7.12 Notification of Certain Matters........................................61
7.13 Certain Matters, Certain Revaluations, Changes and Adjustments.........61
7.14 Advisory Board.........................................................62
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger.............63
8.2 Conditions to Obligations of Parent....................................64
8.3 Conditions to Obligations of the Company...............................65
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination............................................................67
9.2 Effect of Termination..................................................69
9.3 Amendment..............................................................69
9.4 Extension; Waiver......................................................70
Page
----
9.5 Termination Fee........................................................70
ARTICLE X
GENERAL PROVISIONS
10.1 Closing................................................................71
10.2 Nonsurvival of Representations, Warranties and Agreements..............71
10.3 Expenses...............................................................71
10.4 Notices................................................................71
10.5 Interpretation.........................................................72
10.6 Counterparts...........................................................73
10.7 Entire Agreement.......................................................73
10.8 Governing Law..........................................................73
10.9 Severability...........................................................73
10.10 Publicity..............................................................73
10.11 Assignment; No Third Party Beneficiaries...............................74
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 18, 1998, between Dime
Community Bancshares, Inc., a Delaware corporation ("Parent"), and Financial
Bancorp, Inc., a Delaware corporation (the "Company"). (Parent and the Company
are sometimes collectively referred to herein as the "Constituent
Corporations".)
WHEREAS, the Boards of Directors of Parent and the Company have determined
that it is in the best interests of their respective companies and their
stockholders to consummate the business combination transaction provided for
herein in which the Company will, subject to the terms and conditions set forth
herein, merge (the "Merger") with and into Parent;
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to Parent's willingness to enter into this
Agreement, Parent and the Company have entered into a Stock Option Agreement
(the "Stock Option Agreement"), pursuant to which the Company has granted to
Parent an option to purchase shares of the Company's common stock, par value
$0.01 per share (the "Company Common Stock"), upon the terms and conditions
therein contained; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement, in
accordance with the Delaware General Corporation Law (the "DGCL"), at the
Effective Time (as defined in Section 1.2 hereof), the Company shall merge with
and into Parent. Parent shall be the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") in the Merger, and shall continue
its corporate existence under the laws of the State of Delaware. The name of the
Surviving Corporation shall continue to be Dime Community Bancshares, Inc. Upon
consummation of the Merger, the separate corporate existence of the Company
shall terminate.
1.2 Effective Time. The Merger shall become effective as set forth in the
certificate of merger (the "Certificate of Merger") which shall be filed with
the Secretary of State of the State of Delaware (the "Secretary") on the Closing
Date (as defined in Section 10.1 hereof). The term "Effective Time" shall be the
date and time when the Merger becomes effective, as set forth in the Certificate
of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in Sections 259 and 261 of the DGCL.
1.4 Conversion of Company Common Stock. (a) At the Effective Time, subject
to Section 1.8, Section 2.2(e) and Section 9.1(g) hereof, each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
(other than (i) shares of Company Common Stock held in the Company's treasury,
(ii) unallocated shares of Company Common Stock held in the Company's
Recognition and Retention Plans and related trusts, and (iii) shares of Company
Common Stock held directly or indirectly by Parent or the Company or any of
their respective Subsidiaries (as defined below) (except for Trust Account
Shares and DPC Shares, as such terms are defined in Section 1.4(b) hereof),
shall by virtue of this Agreement and without any action on the part of the
Company, Parent or the holder thereof, cease to be outstanding and shall be
converted into and become the right to receive, at the election of the holder
thereof as provided in Section 1.5, either:
(i) a number of shares of common stock, par value $0.01 per share, of
Parent ("Parent Common Stock") (together with the number of Parent Rights
(as defined in Section 5.2 hereof) associated therewith) equal to the Final
Exchange Ratio, or
(ii) cash in an amount equal to the Per Share Consideration.
(b) At the Effective Time, (i) all shares of Company Common Stock that are
owned by the Company as treasury stock, (ii) all unallocated shares of Company
Common Stock held in the Company's Recognition and Retention Plans and related
trusts, and (iii) all shares of Company Common Stock that are owned directly or
indirectly by Parent or the Company or any of their respective Subsidiaries
(other than shares of Company Common Stock (x) held directly or indirectly in
trust accounts, managed accounts and the like or otherwise held in a fiduciary
capacity for the benefit of third parties (any such shares, and shares of Parent
Common Stock which are similarly held, whether held directly or indirectly by
Parent or the Company, as the case may be, being referred to herein as "Trust
Account Shares") and (y) held by Parent or the Company or any of their
respective Subsidiaries in respect of a debt previously contracted (any such
shares of Company Common Stock, and shares of Parent Common Stock which are
similarly held,
2
being referred to herein as "DPC Shares"), shall be cancelled and shall cease to
exist and no stock of Parent or other consideration shall be delivered in
exchange therefor. All shares of Parent Common Stock that are owned by the
Company or any of its Subsidiaries (other than Trust Account Shares and DPC
Shares) shall become treasury stock of Parent,
(c) On and after the Effective Time, holders of certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Certificates") shall cease to have any rights as
stockholders of the Company, except the right to receive the consideration set
forth in this Article I (the "Merger Consider ation") for each such share held
by them.
(d) If, between the date of this Agreement and the Effective Time, the
shares of Parent Common Stock shall be changed into a different number or class
of shares by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or a stock dividend thereon
shall be declared with a record date within said period, appropriate adjustments
shall be made to the Preliminary Stock Ratio, the Minimum Stock Ratio, the
Maximum Stock Ratio and the Final Exchange Ratio.
(e) For purposes of this Agreement the following terms shall (subject to
Section 9.1(g)) have the meanings indicated:
"Aggregate Cash Consideration" shall mean the product obtained by
multiplying (x) the Outstanding Shares Number by (y) $20.25.
"Aggregate Merger Consideration" shall mean the sum of (x) the Aggregate
Cash Consideration and (y) the Aggregate Stock Consideration.
"Aggregate Stock Consideration" shall mean (w) 0.5 multiplied by (x) the
Outstanding Shares Number multiplied by (y) the Average Closing Price
multiplied by (z) the Preliminary Stock Ratio.
"Average Closing Price" shall mean the average of the closing sale prices
per share for Parent Common Stock as reported on the National Association
of Securities Dealers Automated Quotation/National Market System ("NASDAQ/
NMS") (as reported by The Wall Street Journal, or, if not reported thereby,
another authoritative source, during the ten (10) consecutive trading-day
period during which the shares of Parent Common Stock are traded on the
Nasdaq Stock Market National Market System ("Nasdaq") ending on the tenth
business day immediately prior to the anticipated Effective Time.
3
"Final Exchange Ratio" shall mean the quotient, rounded to the nearest
ten-thousandth, obtained by dividing the Per Share Consideration by the
Average Closing Price.
"Outstanding Shares Number" shall mean shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time.
"Per Share Consideration" shall mean the quotient obtained by dividing the
Aggregate Merger Consideration by the Outstanding Shares Number.
"Preliminary Stock Ratio" shall mean the quotient, rounded to the nearest
ten-thousandth obtained by dividing $40.50 by the Average Closing Price
provided, that (i) if the Average Closing Price is equal to or greater than
$31.05, the Preliminary Stock Ratio shall be 1.3043 (the "Minimum Stock
Ratio"), and (ii) if the Average Closing Price is equal to or less than
$22.95, the Preliminary Stock Ratio shall be 1.7647 (the "Maximum Stock
Ratio").
1.5 Election Procedures. (a) An election form and other appropriate and
customary transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to Certificates shall pass, only upon
proper delivery of such Certificates to a bank or trust company designated by
Parent and reasonably satisfactory to the Company (the "Exchange Agent")) in
such form as the Company and Parent shall mutually agree (the "Election Form"),
shall be mailed 30 days prior to the anticipated Effective Time or on such
earlier date as Parent and the Company shall mutually agree (the "Mailing Date")
to each holder of record of Company Common Stock as of five business days prior
to the Mailing Date ("Election Form Record Date"); provided, however, that the
Mailing Date shall not occur prior to the receipt of the shareholder approval
contemplated by Section 8.1(a) hereof.
Each Election Form shall permit a holder (or the beneficial owner through
appropriate and customary documentation and instructions) of outstanding Company
Common Stock to elect, subject to provisions of this Section 1.5, to receive, on
a per share basis, with respect to such holder's Company Common Stock (i) cash
(shares as to which such election is made, the "Cash Election Shares") or (ii)
Parent Common Stock (shares as to which such election is made, the "Stock
Election Shares"). Notwithstanding the foregoing, no holder of Company Common
Stock may elect to receive Parent Common Stock pursuant to the election
procedures provided herein with respect to fewer than 50 shares of Company
Common Stock. To be effective, a properly completed Election Form shall be
submitted to the Exchange Agent on or before 5:00 p.m., New York City time, on
the 20th day following the Mailing Date (or such other time and date as Parent
and the Company may mutually agree) (the "Election Deadline") ; provided,
4
however, that the Election Deadline may not occur on or after the Closing Date
(as defined in Section 10.1 hereof).
Parent shall make available up to two separate Election Forms, or such
additional Election Forms as Parent may permit, to all persons who become
holders (or beneficial owners) of Company Common Stock between the Election Form
Record Date and close of business on the business day prior to the Election
Deadline. The Company shall provide to the Exchange Agent all information
reasonably necessary for it to perform as specified herein. An election shall
have been properly made only if the Exchange Agent shall have actually received
a properly completed Election Form by the Election Deadline. An Election Form
shall be deemed properly completed only if accompanied by one or more
Certificates (or customary affidavits and indemnification regarding the loss or
destruction of such Certificates or the guaranteed delivery of such
Certificates) representing all shares of Company Common Stock covered by such
Election Form, together with duly executed transmittal materials included with
the Election Form. If a stockholder either (i) does not submit a properly
completed Election Form in a timely fashion, or (ii) revokes its Election Form
prior to the Election Deadline, the shares of Company Common Stock held by such
stockholder shall be designated "No Election Shares." Parent shall cause the
Certificates described in clause (ii) of the preceding sentence to be promptly
returned without charge to the person submitting the Election Form upon written
request to that effect from the person who submitted the Election Form. Subject
to the terms of this Agreement and of the Election Form, the Exchange Agent
shall have reasonable discretion to determine whether any election, revocation
or change has been properly or timely made and to disregard immaterial defects
in any Election Form, and any good faith decisions of the Exchange Agent
regarding such matters shall be binding and conclusive. Neither Parent nor the
Exchange Agent shall be under any obligation to notify any person of any defect
in an Election Form.
(b) The "Cash Election Amount" shall be equal to the Per Share
Consideration multiplied by the total number of Cash Election Shares. Within
five business days after the Election Deadline, unless the Effective Time has
not yet occurred, in which case as soon thereafter as practicable, Parent shall
cause the Exchange Agent to effect the allocation among the holders of Company
Common Stock of rights to receive Parent Common Stock or cash in the Merger in
accordance with the Election Forms as follows:
(i) If the Aggregate Cash Consideration is greater than the Cash
Election Amount, then
(A) all Cash Election Shares shall be converted into the right to
receive an amount of cash equal to the Per Share Consideration,
5
(B) the Exchange Agent will select, on a pro rata basis, first
from among the holders of No Election Shares and then, if necessary,
from among the holders of Stock Election Shares, a sufficient number
of such shares ("Cash Designee Shares") such that the sum of Cash
Designee Shares and Cash Election Shares multiplied by the Per Share
Consideration equals as closely as practicable the Aggregate Cash
Consideration (the Cash Designee Shares shall be converted into the
right to receive an amount of cash equal to the Per Share
Consideration), and
(C) any Stock Election Shares and any No Election Shares, in each
case, not so selected as Cash Designee Shares shall be converted into
the right to receive Parent Common Stock at the Final Exchange Ratio.
(ii) If the Aggregate Cash Consideration is less than the Cash
Election Amount, then
(A) all Stock Election Shares and all No Election Shares shall be
converted into the right to receive Parent Common Stock at the Final
Exchange Ratio,
(B) the Exchange Agent will select, on a pro rata basis from
among the holders of Cash Election Shares, a sufficient number of such
shares ("Stock Designee Shares") such that the number of Stock
Designee Shares multiplied by the Per Share Consideration equals as
closely as practicable the difference between the Cash Election Amount
and the Aggregate Cash Consider ation (the Stock Designee Shares shall
be converted into the right to receive Parent Common Stock at the
Final Exchange Ratio), and
(C) any Cash Election Shares not so selected as Stock Designee
Shares shall be converted into the right to receive an amount of cash
equal to the Per Share Consideration.
The pro rata selection process to be used by the Exchange Agent shall
consist of such equitable pro ration processes as shall be mutually determined
by the Company and Parent.
1.6 Stock Options. (a) At the Effective Time, each option granted by the
Company to purchase shares of Company Common Stock (each a "Company Option"),
which is outstanding and unexercised immediately prior thereto, whether or not
then
6
vested or exercisable, shall be cancelled and all rights thereunder shall be
extinguished. As consideration for such cancellation, the Company shall make
payment immediately prior to the Effective Time to each holder of a Company
Option of an amount determined by multiplying (x) the number of shares of
Company Common Stock underlying such Company Option by (y) an amount equal to
the excess (if any) of (i) the Per Share Consideration, over (ii) the exercise
price per share of such Company Option, provided, however, that no such payment
shall be made to a holder unless and until such holder has executed and
delivered to the Company an instrument in such form prescribed by the Parent and
reasonably satisfactory to the Company accepting such payment in full settlement
of his rights relative to the Company Option. Prior to the Effective Time, the
Company shall take or cause to be taken all actions required under the Company
Option Plans to provide for the foregoing.
(b) Notwithstanding the provisions of Section 1.6(a) above, at the
Effective Time, each Company Option held by the individuals previously
designated by Parent and set forth on Schedule 1.6(b) hereto ("Continuing Option
Holders") which is outstanding and unexercised immediately prior thereto shall
at the election of the holder thereof be converted automatically into an option
to purchase shares of Parent Common Stock in an amount and at an exercise price
determined as provided below (and otherwise subject to the terms of the
Company's 1995 Incentive Stock Option Plan and the Company's 1995 Stock Option
Plan for Outside Directors, as the case may be (collec tively, the "Company
Option Plans"), the agreements evidencing grants thereunder and any other
agreements between the Company and an optionee regarding Company Options which
have been delivered to Parent prior to the date of this Agreement, other than
stock appreciation rights or limited stock appreciation rights or other rights
to receive cash payments under the Company Option Plans):
(1) the number of shares to be subject to the new option shall be
equal to the product of the number of shares of Company Common Stock
subject to the original option and the Final Exchange Ratio, provided that
any fractional shares of Parent Common Stock resulting from such
multiplication shall be rounded down to the nearest whole share; and
(2) the exercise price per share of Parent Common Stock under the new
option shall be equal to the exercise price per share of Company Common
Stock under the original option divided by the Final Exchange Ratio,
provided that such exercise price shall be rounded up to the nearest cent.
The adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Internal Revenue Code of 1986,
as amended
7
(the "Code")) shall be and is intended to be effected in a manner which is
consistent with Section 424(a) of the Code and, to the extent it is not so
consistent, such Section 424(a) shall override anything to the contrary
contained herein. The duration and other terms of the new option shall be the
same as the original option except that all references to the Company shall be
deemed to be references to Parent. In order for any Continuing Option Holder to
have his or her Company Options converted into an option to purchase Parent
Common Stock as set forth in this Section 1.6(b), such Continuing Option Holder
shall have executed a written election with respect to such conversion no later
than five (5) business days prior to the Closing Date, which written election
shall be in such form as shall be prescribed by Parent and reasonably
satisfactory to the Company.
(c) Prior to the Effective Time, Parent shall reserve for issuance the
number of shares of Parent Common Stock necessary to satisfy Parent's
obligations under Section 1.6(b) hereof. Promptly after the Effective Time (but
in no event later than three business days thereafter), Parent shall file with
the Securities and Exchange Commission (the "SEC") a registration statement on
an appropriate form under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of Parent Common Stock subject to
options to acquire Parent Common Stock issued pursuant to Section 1.6(b) hereof,
and shall use its best efforts to maintain the current status of the prospectus
contained therein, as well as comply with applicable state securities or "blue
sky" laws, for so long as such options remain outstanding.
1.7 Parent Common Stock. Except for shares of Parent Common Stock owned by
the Company or any of its Subsidiaries (other than Trust Account Shares and DPC
Shares), which shall be converted into treasury stock of Parent as contemplated
by Section 1.4 hereof, the shares of Parent Common Stock issued and outstanding
immediately prior to the Effective Time shall be unaffected by the Merger and
such shares shall remain issued and outstanding.
1.8 Shares of Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary, any shares of Company Common Stock that are issued
and outstanding as of the Effective Time and that are held by a stockholder who
has properly exercised his appraisal rights (the "Dissenting Shares") under the
DGCL shall not be converted into the right to receive the Merger Consideration
unless and until the holder shall have failed to perfect, or shall have
effectively withdrawn or lost, his right to dissent from the Merger under the
DGCL and to receive such consideration as may be determined to be due with
respect to such Dissenting Shares pursuant to and subject to the requirements of
the DGCL. If any such holder shall have failed to perfect or shall have
effectively withdrawn or lost such right, each share of such holder's Company
Common Stock shall thereupon be deemed to have been converted into and to have
become, as of
8
the Effective Time, the right to receive, without any interest thereon, the
Merger Consideration as provided in Section 1.4 and as allocated pursuant to
Section 1.5 upon surrender of the Certificate or Certificates representing such
Dissenting Shares. The Company shall give Parent (i) prompt notice of any notice
or demands for appraisal or payment for shares of Company Common Stock received
by the Company and (ii) the opportunity to participate in and direct all
negotiations and proceedings with respect to any such demands or notices. The
Company shall not, without the prior written consent of Parent, make any payment
with respect to, or settle, offer to settle or otherwise negotiate, any such
demands. Dissenting Shares shall be deemed to be No Election Shares for purposes
of Section 1.5 hereof.
1.9 Tax Opinion Adjustment. If either (i) the tax opinion referred to in
Section 8.2(d) cannot be rendered (as reasonably determined by Xxxxxxx Xxxxxxxx
& Xxxx) or (ii) the tax opinion referred to in Section 8.3(d) cannot be rendered
(as reasonably determined by Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP), in
either case as a result of the Merger potentially failing to qualify as a
reorganization under Section 368(a) of the Code, then Parent shall reduce the
Aggregate Cash Consideration to the minimum extent necessary to enable the
relevant tax opinion or opinions, as the case may be, to be rendered, and
correspondingly increase the Aggregate Stock Consideration.
1.10 Certificate of Incorporation. At the Effective Time, the Certificate
of Incorporation of Parent, as in effect at the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation.
1.11 By-Laws. At the Effective Time, the By-Laws of Parent, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended in accordance with applicable law.
1.12 Directors and Officers. The directors and officers of Parent
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corpora tion, each to hold office in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation until
their respective successors are duly elected or appointed and qualified.
1.13 Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code and that this
Agreement shall constitute a "plan of reorganization" for purposes of Section
368 of the Code.
1.14 Bank Merger. Promptly following the execution of the Agreement, the
Parent Bank (as defined below) and the Company Bank (as defined below) shall
enter into
9
the Plan of Bank Merger (the "Bank Merger") in the form annexed hereto as
Exhibit A (which shall qualify as a reorganization under Section 368(a) of the
Code) pursuant to which the Bank Merger will be effected pursuant to and with
the effect set forth in the rules and regulations of the Office of Thrift
Supervision ("OTS"). The parties hereto intend that the Bank Merger shall become
effective on the Effective Date following the Effective Time of the Merger. The
documentation relating to the Bank Merger shall provide that the directors of
the Parent Bank as the surviving entity of the Bank Merger shall be all of the
respective directors of the Parent Bank immediately prior to such merger.
ARTICLE II
EXCHANGE OF SHARES
2.1 Parent to Make Shares Available. At or prior to the Effective Time,
Parent shall deposit, or shall cause to be deposited, with the Exchange Agent,
for the benefit of the holders of Certificates, for exchange in accordance with
this Article II, certificates representing the shares of Parent Common Stock,
the cash in lieu of fractional shares and an amount of cash sufficient to pay
the Aggregate Cash Consideration (such cash and certificates for shares of
Parent Common Stock, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund") to be issued
pursuant to Section 1.4 and paid pursuant to Section 2.2(a) in exchange for
outstanding shares of Company Common Stock.
2.2 Exchange of Shares. (a) As soon as practicable after the Effective
Time, and in no event more than five business days thereafter, the Exchange
Agent shall mail to each holder of record of a Certificate or Certificates who
has not previously surrendered such Certificate or Certificates with a Form of
Election a form letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent) and instructions for
use in effecting the surrender of the Certificates in exchange for the Merger
Consideration into which the shares of Company Common Stock represented by such
Certificate or Certificates shall have been converted pursuant to this
Agreement. The Company shall have the right to review both the letter of
transmittal and the instructions prior to the Effective Time and provide
reasonable comments thereon. Upon surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration to which such holder of Company
Common Stock shall have become entitled pursuant to the provisions of Article I
hereof,
10
and the Certificate so surrendered shall forthwith be cancelled. No interest
will be paid or accrued on any cash constituting Merger Consideration (including
the cash in lieu of fractional shares) and any unpaid dividends and
distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the Effective Time
with respect to Parent Common Stock and payable to the holders of record thereof
shall be paid to the holder of any unsurrendered Certificate until the holder
thereof shall surrender such Certificate in accordance with this Article II.
After the surrender of a Certificate in accordance with this Article II, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to shares of Parent Common Stock, if any, represented by
such Certificate.
(c) If any certificate representing shares of Parent Common Stock is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed (or accompanied
by an appropriate instrument of transfer) and otherwise in proper form for
transfer, and that the person requesting such exchange shall pay to the Exchange
Agent in advance any transfer or other taxes required by reason of the issuance
of a certificate representing shares of Parent Common Stock in any name other
than that of the registered holder of the Certificate surrendered, or required
for any other reason, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Company of the shares of Company Common Stock which were
issued and outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates representing such shares are presented for transfer
to the Exchange Agent, they shall be canceled and exchanged for Merger
Consideration as determined in accordance with Article I and this Article II.
(e) Notwithstanding anything to the contrary contained herein, no
certificates or scrip representing fractional shares of Parent Common Stock
shall be issued upon the surrender for exchange of Certificates, no dividend or
distribution with respect to Parent Common Stock shall be payable on or with
respect to any fractional share, and such fractional share interests shall not
entitle the owner thereof to vote or to any other rights of a stockholder of
Parent. In lieu of the issuance of any such fractional share, Parent shall pay
to each former stockholder of the Company who otherwise would be entitled to
receive a fractional share of Parent Common Stock an
11
amount in cash determined by multiplying (i) the Average Closing Price by (ii)
the fraction of a share of Parent Common Stock which such holder would otherwise
be entitled to receive pursuant to Section 1.4 hereof.
(f) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of the Company for twelve months after the Effective Time shall be
paid to Parent. Any stockholders of the Company who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of the cash, shares of Parent Common Stock, cash in lieu of fractional shares
and unpaid dividends and distributions on the Parent Common Stock deliverable in
respect of each share of Company Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon. If outstanding Certificates are not surrendered or the payment for them
is not claimed prior to the date on which such payments would otherwise escheat
to or become the property of any governmental unit or agency, the unclaimed
items shall, to the extent permitted by abandoned property and any other
applicable law, become the property of Parent (and to the extent not in its
possession shall be paid over to it), free and clear of all claims or interest
of any person previously entitled to such claims. Notwithstanding the foregoing,
none of Parent, the Company, the Exchange Agent or any other person shall be
liable to any former holder of shares of Company Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(g) 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 Parent, the
posting by such person of a bond in such amount as Parent may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the cash and/or shares of Parent Common Stock and cash in
lieu of fractional shares deliverable in respect thereof pursuant to this
Agreement.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1 Disclosure Schedules. Prior to the execution and delivery of this
Agreement, the Company has delivered to Parent, and Parent has delivered to the
Company, a schedule (in the case of the Company, the "Company Disclosure
Schedule,"
12
and in the case of Parent, the "Parent Disclosure Schedule") setting forth,
among other things, items the disclosure of which is necessary or appropriate
either in response to an express disclosure requirement contained in a provision
hereof or as an exception to one or more of such party's representations or
warranties contained in Article IV, in the case of the Company, or Article V, in
the case of Parent, or to one or more of such party's covenants contained in
Article VI; provided, however, that notwithstanding anything in this Agreement
to the contrary (a) no such item is required to be set forth in the Disclosure
Schedule as an exception to a representation or warranty if its absence would
not result in the related representation or warranty being deemed untrue or
incorrect under the standard established by Section 3.2, and (b) the mere
inclusion of an item in a Disclosure Schedule as an exception to a
representation or warranty shall not be deemed an admission by a party that such
item represents a material exception or material fact, event or circumstance or
that such item has had or would have a Material Adverse Effect (as defined
herein) with respect to either the Company or Parent, respectively.
3.2 Standards. (a) No representation or warranty of the Company contained
in Article IV (other than the representations set forth in the first and third
sentences of Section 4.1(a), the second sentence of Section 4.1(b) and Sections
4.2, 4.6, 4.8(a), 4.10 and 4.18) or of Parent contained in Article V (other than
the representations set forth in the first and third sentences of Section
5.1(a), the second sentence of Section 5.1(b) and Sections 5.2, 5.6, 5.8(a),
5.10 and 5.18) shall be deemed untrue or incorrect for any purpose under this
Agreement, and no party hereto shall be deemed to have breached a representation
or warranty for any purpose under this Agreement, in any case as a consequence
of the existence or absence of any fact, circumstance or event unless such fact,
circumstance or event, individually or when taken together with all other facts,
circumstances or events inconsistent with any representations or warranties
contained in Article IV, in the case of the Company, or Article V, in the case
of Parent, has had a Material Adverse Effect with respect to the Company or
Parent, respectively.
(b) As used in this Agreement, the term "Material Adverse Effect" means,
with respect to Parent or the Company, as the case may be, a material adverse
effect on (i) the business, results of operations or financial condition of such
party and its Subsidiaries taken as a whole, other than any such effect
attributable to or resulting from (x) any change in banking or similar laws,
rules or regulations of general applicability or interpretations thereof by
courts or governmental authorities, (y) any change in GAAP (as defined herein)
or regulatory accounting principles applicable to banks, thrifts or their
holding companies generally, or (z) any action or omission of the Company or
Parent or any Subsidiary of either of them taken with the prior written consent
of the other party hereto or (ii) the ability of such party and its Subsidiaries
to
13
consummate the transactions contemplated hereby. As used in this Agreement, the
word "Subsidiary" when used with respect to any party means any corporation,
partnership or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to Article III, the Company hereby represents and warrants to
Parent as follows:
4.1 Corporate Organization. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has the corporate power and authority to own or lease all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly licensed or qualified to do business in each jurisdiction
in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary. The Company is duly registered as a unitary savings and
loan holding company under the Home Owners' Loan Act, as amended (the "HOLA").
The Certificate of Incorporation and By-laws of the Company, copies of which
have previously been made available to Parent, are true and correct copies of
such documents as in effect as of the date of this Agreement.
(b) Financial Federal Savings Bank (the "Company Bank") is a stock savings
bank duly organized, validly existing and in good standing under the laws of the
United States of America. The deposit accounts of the Company Bank are insured
by the Federal Deposit Insurance Corporation (the "FDIC") through the Savings
Association Insurance Fund to the fullest extent permitted by law, and all
premiums and assessments required to be paid in connection therewith have been
paid when due. Each of the Company's other Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization. Each of the Company's
Subsidiaries has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or the location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary. The certificate of incorporation, by-laws and similar
governing documents of each Subsidiary of the Company, copies of which have
previously been made
14
available to Parent, are true and correct copies of such documents as in effect
as of the date of this Agreement.
(c) The minute books of the Company and each of its Subsidiaries contain
true and correct records of all meetings and other corporate actions held or
taken since December 31, 1995 of their respective stockholders and Boards of
Directors (including committees of their respective Boards of Directors).
4.2 Capitalization. (a) The authorized capital stock of the Company
consists of 6,000,000 shares of Company Common Stock and 2,500,000 shares of
preferred stock, par value $.01 per share (the "Company Preferred Stock"). As of
July 15, 1998, there were 1,706,666 shares of Company Common Stock outstanding
and 478,334 shares of Company Common Stock held by the Company as treasury
stock. As of July 15, 1998, there were (i) no shares of Company Common Stock
reserved for issuance upon exercise of outstanding stock options or otherwise
except for (x) 171,766 shares of Company Common Stock reserved for issuance
pursuant to the Company Option Plans and described in Section 4.2(a) of the
Company Disclosure Schedule and (y) 339,627 shares of Company Common Stock
reserved for issuance upon exercise of the option to be issued to Parent
pursuant to the Stock Option Agreement and (ii) no shares of Company Preferred
Stock issued or outstanding, held in the Company's treasury or reserved for
issuance upon exercise of outstanding stock options or otherwise. All of the
issued and outstanding shares of Company Common Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. Except as
referred to above or reflected in Section 4.2(a) of the Company Disclosure
Schedule, and except for the Stock Option Agreement, the Company does not have
and is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Company Common Stock or Company Preferred Stock or any other
equity security of the Company or any securities representing the right to
purchase or otherwise receive any shares of Company Common Stock or any other
equity security of the Company. The names of the optionees, the date of each
option to purchase Company Common Stock granted, the number of shares subject to
each such option, the expiration date of each such option, and the price at
which each such option may be exercised under the Company Option Plans are set
forth in Section 4.2(a) of the Company Disclosure Schedule.
(b) Section 4.2(b) of the Company Disclosure Schedule sets forth a true and
correct list of all of the Subsidiaries of the Company. Except as set forth in
Section 4.2(b) of the Company Disclosure Schedule, the Company owns, directly or
indirectly, all of the issued and outstanding shares of the capital stock of
each of such
15
Subsidiaries, free and clear of all liens, charges, encumbrances and security
interests whatsoever, and all of such shares are duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. No Subsidiary of the
Company has or is bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Subsidiary. Assuming compliance by Parent with Section 1.5 hereof, at the
Effective Time, there will not be any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character by which the Company
or any of its Subsidiaries will be bound calling for the purchase or issuance of
any shares of the capital stock of the Company or any of its Subsidiaries.
4.3 Authority; No Violation. (a) The Company has full corporate power and
authority to execute and deliver this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of the Company. The Board of Directors of the Company
has directed that this Agreement and the transactions contemplated hereby be
submitted to the Company's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this Agreement by the requisite
vote of the Company's stockholders, no other corporate proceedings on the part
of the Company are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and (assuming due authorization, execution
and delivery by Parent) this Agreement constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 4.3(b) of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company,
nor the consummation by the Company of the transactions contemplated hereby, nor
compliance by the Company with any of the terms or provisions hereof, will (i)
violate any provision of the Certificate of Incorporation or By-Laws of the
Company or the certificate of incorporation, by-laws or similar governing
documents of any of its Subsidiaries, or (ii) assuming that the consents and
approvals referred to in Section 4.4 hereof are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation,
16
judgment, order, writ, decree or injunction applicable to the Company or any of
its Subsidiaries, or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss of
any benefit under, constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, result in the termination
of or a right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the respective properties or assets of
the Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which the Company or any
of its Subsidiaries is a party, or by which they or any of their respective
properties or assets may be bound or affected.
4.4 Consents and Approvals. Except for (a) the filing of applications and
notices, as applicable, with the OTS under the HOLA, Bank Merger Act, Federal
Deposit Insurance Act and the rules and regulations of the OTS and approval of
such applications and notices, (b) the filing of such applications, filings,
authorizations, orders and approvals as may be required under applicable state
law (the "State Banking Approvals"), (c) the filing with the SEC of a proxy
statement in definitive form relating to the meeting of the Company's
stockholders to be held in connection with this Agreement and the transactions
contemplated hereby (the "Proxy Statement") and the filing and declaration of
effectiveness of the registration statement on Form S-4 (the "S- 4") in which
the Proxy Statement will be included as a prospectus, (d) the approval of this
Agreement by the requisite vote of the stockholders of the Company, (e) the
filing of the Certificate of Merger with the Secretary pursuant to the DGCL, (f)
approval of the listing of the Parent Common Stock to be issued in the Merger on
the NASDAQ/NMS, and (g) such filings, authorizations or approvals as may be set
forth in Section 4.4 of the Company Disclosure Schedule, no consents or
approvals of or filings or registrations with any court, administrative agency
or commission or other governmental authority or instrumentality (each a
"Governmental Entity") or with any third party are necessary in connection with
(1) the execution and delivery by the Company of this Agreement and (2) the
consummation by the Company of the Merger and the other transactions
contemplated hereby.
4.5 Reports. The Company and each of its Subsidiaries have 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,
1995 with (i) the OTS, (ii) the FDIC, (iii) any state banking commissions or any
other state regulatory authority (each a "State Regulator") and (iv) any other
self-regulatory organization ("SRO") (collectively with the Federal Reserve
Board, the "Regulatory Agencies"), and
17
have paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Regulatory Agency in the regular
course of the business of the Company and its Subsidiaries, and except as set
forth in Section 4.5 of the Company Disclosure Schedule, no Regulatory Agency
has initiated any proceeding or, to the knowledge of the Company, investigation
into the business or operations of the Company or any of its Subsidiaries since
December 31, 1995. There is no unresolved violation, criticism, or exception by
any Regulatory Agency with respect to any report or statement relating to any
examinations of the Company or any of its Subsidiaries.
4.6 Financial Statements. The Company has previously made available to
Parent copies of (a) the consolidated statements of financial condition of the
Company and its Subsidiaries as of September 30, for the fiscal years 1996 and
1997, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the fiscal years 1995 through 1997,
inclusive, as reported in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1997 filed with the SEC under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), in each case accompanied
by the audit report of Radics & Co., LLC, independent public accountants with
respect to the Company, and (b) the unaudited consolidated statements of
financial condition of the Company and its Subsidiaries as of March 31, 1998 and
March 31, 1997 and the related unaudited consolidated statements of income, cash
flows and changes in stockholders' equity for the six-month periods then ended
as reported in the Company's Quarterly Report on Form 10-Q for the period ended
March 31, 1998 filed with the SEC under the Exchange Act. The September 30, 1997
consolidated statement of financial condition of the Company (including the
related notes, where applicable) fairly presents the consolidated financial
position of the Company and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 4.6 (including the
related notes, where applicable) fairly present, and the financial statements to
be filed with the SEC after the date hereof will fairly present (subject, in the
case of the unaudited statements, to recurring audit adjustments normal in
nature and amount), the results of the consolidated operations and consolidated
financial position of the Company and its Subsidiaries for the respective fiscal
periods or as of the respective dates therein set forth; each of such statements
(including the related notes, where applicable) complies, and the financial
statements to be filed with the SEC after the date hereof will comply, with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto; and each of such statements (including the
related notes, where applicable) has been, and the financial statements to be
filed with the SEC after the date hereof will be, prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods involved, except as indicated in the notes thereto or, in the
18
case of unaudited statements, as permitted by Form 10-Q. The books and records
of the Company and its Subsidiaries have been, and are being, maintained in
accordance with GAAP and any other applicable legal and accounting requirements.
4.7 Broker's Fees. Neither the Company nor any Subsidiary of the Company
nor any of their respective officers or directors has employed any broker or
finder or incurred any liability for any broker's fees, commissions or finder's
fees in connection with any of the transactions contemplated by this Agreement,
except that the Company has engaged, and will pay a fee or commission to,
Sandler X'Xxxxx & Partners, L.P. ("Sandler X'Xxxxx") in accordance with the
terms of a letter agreement between Sandler X'Xxxxx and the Company, a true and
correct copy of which has been previously made available by the Company to
Parent.
4.8 Absence of Certain Changes or Events. (a) Except as disclosed in any
Company Report (as defined in Section 4.12) filed with the SEC prior to the date
of this Agreement, since September 30, 1997, there has been no change or
development or combination of changes or developments which, individually or in
the aggregate, has had a Material Adverse Effect on the Company.
(b) Except as disclosed in any Company Report filed with the SEC prior to
the date of this Agreement, since September 30, 1997, the Company and its
Subsidiaries have carried on their respective businesses in the ordinary course
consistent with their past practices.
(c) Except as set forth in Section 4.8(c) of the Company Disclosure
Schedule, since March 31, 1998, neither the Company nor any of its Subsidiaries
has (i) increased the wages, salaries, compensation, pension, or other fringe
benefits or perquisites payable to any executive officer, employee, or director
from the amount thereof in effect as of March 31, 1998 (which amounts have been
previously disclosed to Parent), granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay, or
paid any bonus (except (x) for salary increases and bonus payments made in the
ordinary course of business consistent with past practices following the date
hereof and (y) the Company may adopt the severance plan described in Section
6.1(j) of the Company Disclosure Schedule), (ii) suffered any strike, work
stoppage, slow-down, or other labor disturbance, (iii) been a party to a
collective bargaining agreement, contract or other agreement or understanding
with a labor union or organization, or (iv) had any union organizing activities.
4.9 Legal Proceedings. (a) Except as set forth in Section 4.9(a) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a
19
party to any, and there are no pending or, to the Company's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against the
Company or any of its Subsidiaries or challenging the validity or propriety of
the transactions contemplated by this Agreement.
(b) Except as set forth in Section 4.9(b) of the Company Disclosure
Schedule, there is no injunction, order, judgment, decree, or regulatory
restriction imposed upon the Company, any of its Subsidiaries or the assets of
the Company or any of its Subsidiaries.
4.10 Taxes. (a) Except as set forth in Section 4.10(a) of the Company
Disclosure Schedule, each of the Company and its Subsidiaries has (i) duly and
timely filed (including applicable extensions granted without penalty) all
material Tax Returns (as hereinafter defined) required to be filed at or prior
to the Effective Time, and such Tax Returns are true and correct in all material
respects, and (ii) paid in full or made adequate provision in the financial
statements of the Company (in accordance with GAAP) for all material Taxes (as
hereinafter defined) shown to be due on such Tax Returns. Except as set forth in
Section 4.10(a) of the Company Disclosure Schedule, (i) as of the date hereof
neither the Company nor any of its Subsidiaries has requested any extension of
time within which to file any Tax Returns in respect of any fiscal year which
have not since been filed and no request for waivers of the time to assess any
Taxes are pending or outstanding, and (ii) as of the date hereof, with respect
to each taxable period of the Company and its Subsidiaries, the federal and
state income Tax Returns of the Company and its Subsidiaries have been audited
by the Internal Revenue Service or appropriate state tax authorities or the time
for assessing and collecting income Tax with respect to such taxable period has
closed and such taxable period is not subject to review. Except as set forth in
Section 4.10(a) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries (i) has made an election under Section 341(f) of the Code,
(ii) has made any payment, is obligated to make any payment, or is a party to
any agreement that could obligate it to make any payment that would not be
deductible under Section 280G of the Code, (iii) has issued or assumed any
obligation under Section 279 of the Code, any high yield discount obligation as
described in Section 163(i) of the Code or any registration-required obligation
within the meaning of Section 163(f)(2) of the Code that is not in registered
form, or (iv) is or has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code.
(b) For the purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any United
States
20
federal, state, local or foreign taxing authority, including, but not limited to
income, excise, property, sales, transfer, franchise, payroll, withholding,
social security or other taxes, including any interest, penalties or additions
attributable thereto. For purposes of this Agreement, "Tax Return" shall mean
any return, report, information return or other document (including any related
or supporting information) with respect to Taxes.
4.11 Employees. (a) Section 4.11(a) of the Company Disclosure Schedule sets
forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning of section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); "pension" plan, fund or program (within the
meaning of section 3(2) of ERISA); each "stay in place" bonus, retention,
employment, consulting, independent contractor, termination or severance
agreement; and each other employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to or
required to be contributed to by, or with respect to which an obligation or
liability exists of, (the "Plans"), the Company, any of its Subsidiaries or by
any trade or business, whether or not incorporated (an "ERISA Affiliate"), all
of which together with the Company would be deemed a "single employer" within
the meaning of Section 4001 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), for the benefit of any employee or director or
former employee or former director of the Company, any Subsidiary or any ERISA
Affiliate or any person who is an independent contractor or consultant to the
Company, any of its Subsidiaries or any ERISA Affiliate.
(b) The Company has heretofore made available to Parent with respect to
each of the Plans true and correct copies of each of the following documents if
applicable: (i) the Plan document and trust agreement or other funding
arrangement; (ii) the actuarial report for such Plan for each of the last two
years and any subsequent changes to actuarial assumptions; (iii) the most recent
determination letter from the Internal Revenue Service for such Plan; (iv) the
most recent Form 5500, summary plan description and related summaries of
material modifications and (v) with respect to any employee stock ownership
plan, all loan documents and repayment schedules.
(c) Except as set forth in Section 4.11(c) of the Company Disclosure
Schedule: each of the Plans is in compliance with applicable law, including but
not limited to, the Code and ERISA; each of the Plans intended to be "qualified"
within the meaning of section 401(a) of the Code has received a favorable
determination letter from the IRS; no Plan has an accumulated or waived funding
deficiency within the meaning of section 412 of the Code; neither the Company
nor any ERISA Affiliate has incurred, directly or indirectly, any liability to
or on account of a Plan pursuant to Title
21
IV of ERISA (other than PBGC premiums); to the knowledge of the Company no
proceedings have been instituted to terminate any Plan that is subject to Title
IV of ERISA; no "reportable event," as such term is defined in section 4043(c)
of ERISA, has occurred with respect to any Plan (other than a reportable event
with respect to which the thirty day notice period has been waived); and no
condition exists that presents a material risk to the Company of incurring a
liability to or on account of a Plan pursuant to Title IV of ERISA; no Plan is a
multiemployer plan (within the meaning of section 4001(a)(3) of ERISA and no
Plan is a multiple employer plan as defined in Section 413 of the Code; there
are no pending, or to the knowledge of the Company, threatened or anticipated
claims (other than routine claims for benefits) by, on behalf of or against any
of the Plans or any trusts related thereto; the fair market value of the assets
of each Plan subject to Title IV of ERISA exceeds the present value of the
benefit liabilities (as defined in Section 4001(a)(16) of ERISA) under such Plan
as of the most recent plan year end prior to the date hereof, calculated using
the actuarial assumptions used in the most recent actuarial valuation of such
Plan as of the date hereof; with respect to each qualified plan which is an
employee stock ownership plan (as defined in Section 4975(e)(7) of the Code),
any assets of any such plan that are not allocated to partici pants' individual
accounts are pledged as security for, and may be applied to satisfy, any
securities acquisition indebtedness; and there is not currently any legally
binding commitment by the Company or any ERISA Affiliate to create an additional
Plan or amend any Plan (except amendments to comply with law which do not
materially increase the cost of such Plan) and the Company and its Subsidiaries
do not have any obligations for post-retirement or post employment welfare
benefits that cannot be amended or terminated upon sixty days' notice or less
without incurring any liability thereunder, except for coverage required by Part
6 of Title 1 of ERISA of Section 4980B of the Code, the premium cost of which is
borne (to the extent permitted by law) by the insured individuals.
4.12 SEC Reports. The Company has previously made available to Parent a
true and correct copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since December 31, 1995 by
the Company with the SEC pursuant to the Securities Act or the Exchange Act (the
"Company Reports") and (b) communication mailed by the Company to its
stockholders since December 31, 1995, and no such registration statement,
prospectus, report, schedule, proxy statement or communication contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify information
as of an earlier date. The Company has timely filed all Company Reports and
other documents required to be filed by it under the Securities Act and the
Exchange
22
Act, and, as of their respective dates, all Company Reports complied with the
published rules and regulations of the SEC with respect thereto.
4.13 Company Information. The information relating to the Company and its
Subsidiaries which is provided to Parent by the Company for inclusion in the
Proxy Statement and the S-4, or in any other document filed with any other
regulatory agency in connection herewith, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they are made, not
misleading. The Proxy Statement (except for such portions thereof that relate
only to the Parent or any of its Subsidiaries) will comply with the provisions
of the Exchange Act and the rules and regulations thereunder.
4.14 Compliance with Applicable Law. The Company and each of its
Subsidiaries hold, and have at all times held, all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under and pursuant to all, and have complied with and are not in
default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any Governmental Entity relating to the
Company or any of its Subsidiaries, and neither the Company nor any of its
Subsidiaries has received notice of any violations of any of the above.
4.15 Certain Contracts. (a) Except as set forth in Section 4.15(a) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is
a party to or bound by any contract (whether written or oral) (i) with respect
to the employment of any directors or consultants, (ii) which, upon the
consummation of the transactions contemplated by this Agreement, will (either
alone or upon the occurrence of any additional acts or events) result in any
payment or benefits (whether of severance pay or otherwise) becoming due, or the
acceleration or vesting of any rights to any payment or benefits, from Parent,
the Company, the Surviving Corporation or any of their respective Subsidiaries
to any director or consultant thereof, (iii) which is a material contract (as
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after
the date of this Agreement that has not been filed or incorporated by reference
in the Company Reports, (iv) which is a consulting agreement (including data
processing, software programming and licensing contracts) not terminable on 30
days or less notice involving the payment of more than $25,000 per annum, or (v)
which materially restricts the conduct of any line of business by the Company or
any of its Subsidiaries. Each contract, arrangement, commitment or understanding
of the type described in this Section 4.15(a), whether or not set forth in
Section 4.15(a) of the Company Disclosure Schedule, is referred to herein as a
"Company Contract". The
23
Company has previously delivered or made available to Parent true and correct
copies of each Company Contract.
(b) Except as set forth in Section 4.15(b) of the Company Disclosure
Schedule, (i) each Company Contract described in clause (iii) of Section 4.15(a)
is valid and binding and in full force and effect, (ii) the Company and each of
its Subsidiaries has performed all obligations required to be performed by it to
date under each Company Contract described in clause (iii) of Section 4.15(a),
(iii) no event or condition exists which constitutes or, after notice or lapse
of time or both, would constitute, a default on the part of the Company or any
of its Subsidiaries under any Company Contract described in clause (iii) of
Section 4.15(a), and (iv) no other party to any Company Contract described in
clause (iii) of Section 4.15(a) is, to the knowledge of the Company, in default
in any respect thereunder.
(c) Section 4.15 of the Company Disclosure Schedule contains a schedule
showing the good faith estimated present value as of December 31, 1998 of the
monetary amounts payable (including any tax indemnification payments in respect
of income and/or excise taxes) and identifying the in-kind benefits due under
any Plan other than a tax-qualified plan for each director of the Company and
each officer of the Company with the position of vice president or higher,
specifying the assumptions in such schedule.
4.16 Agreements with Regulatory Agencies. Neither the Company nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is 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 (each, whether or not set forth on Section 4.16 of the Company
Disclosure Schedule, a "Regulatory Agreement"), any Governmental Entity that
restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business, nor has
the Company or any of its Subsidiaries been advised by any Governmental Entity
that it is considering issuing or requesting any Regulatory Agreement.
4.17 Environmental Matters. Except as set forth in Section 4.17 of the
Company Disclosure Schedule:
(a) Each of the Company and its Subsidiaries, each of the Participation
Facilities and, to the knowledge of the Company, the Loan Properties (each as
hereinafter defined), are in compliance with all applicable federal, state and
local
24
laws, including common law, regulations and ordinances, and with all applicable
decrees, orders and contractual obligations relating to pollution or the
discharge of, or exposure to, Hazardous Materials (as hereinafter defined) in
the environment or workplace ("Environmental Laws");
(b) There is no suit, claim, action or proceeding, pending or, to the
knowledge of the Company, threatened, before any Governmental Entity or other
forum in which the Company, any of its Subsidiaries, any Participation Facility
or any Loan Property, has been or, with respect to threatened proceedings, may
be, named as a defendant (x) for alleged noncompliance (including by any
predecessor) with any Environmental Laws, or (y) relating to the release,
threatened release or exposure to any Hazardous Material whether or not
occurring at or on a site owned, leased or operated by the Company or any of its
Subsidiaries, any Participation Facility or any Loan Property;
(c) To the knowledge of the Company, during the period of (x) the Company's
or any of its Subsidiaries' ownership or operation of any of their respective
current or former properties, (y) the Company's or any of its Subsidiaries'
participation in the management of any Participation Facility, or (z) the
Company's or any of its Subsidiaries' interest in a Loan Property, there has
been no release of Hazardous Materials in, on, under or affecting any such
property. To the knowledge of the Company, prior to the period of (x) the
Company's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) the Company's or any of its
Subsidiaries' participation in the management of any Participation Facility, or
(z) the Company's or any of its Subsidiaries' interest in a Loan Property, there
was no release of Hazardous Materials in, on, under or affecting any such
property, Participa tion Facility or Loan Property; and
(d) The following definitions apply for purposes of this Section 4.17: (x)
"Hazardous Materials" means any chemicals, pollutants, contaminants, wastes,
toxic substances, petroleum or other regulated substances or materials, (y)
"Loan Property" means any property in which the Company or any of its
Subsidiaries holds a security interest, and, where required by the context, said
term means the owner or operator of such property; and (z) "Participation
Facility" means any facility in which the Company or any of its Subsidiaries
participates in the management and, where required by the context, said term
means the owner or operator of such property.
4.18 Opinion. Prior to the execution of this Agreement, the Company has
received an opinion from Sandler X'Xxxxx to the effect that as of the date
thereof and based upon and subject to the matters set forth therein, the Merger
Consideration is fair
25
to the stockholders of the Company from a financial point of view. Such opinion
has not been amended or rescinded as of the date of this Agreement.
4.19 Approvals. As of the date of this Agreement, the Company knows of no
reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger)
should not be obtained.
4.20 Loan Portfolio. (a) With respect to each loan owned by the Company or
its Subsidiaries in whole or in part (each, a "Loan"), to the best knowledge of
the Company:
(i) the note and the related security documents are each legal, valid
and binding obligations of the maker of obligor thereof, enforceable
against such maker or obligor in accordance with their terms;
(ii) neither the Company nor any of its Subsidiaries nor any prior
holder of a Loan has modified the note or any of the related security
documents in any material respect or satisfied, canceled or subordinated
the note or any of the related security documents except as otherwise
disclosed by documents in the applicable Loan file;
(iii) the Company or a Subsidiary is the sole holder of legal and
beneficial title to each Loan (or the Company's applicable participation
interest, as applicable), except as otherwise referenced on the books and
records of the Company;
(iv) the note and the related security documents, copies of which are
included in the Loan files, are true and correct copies of the documents
they purport to be and have not been suspended, amended, modified, canceled
or otherwise changed except as otherwise disclosed by documents in the
applicable Loan file;
(v) there is no pending or threatened condemnation proceeding or
similar proceeding affecting the property which serves as security for a
Loan, except as otherwise referenced on the books and records of the
Company;
(vi) there is no pending or threatened litigation or proceeding
relating to the property which serves as security for a Loan; and
26
(vii) with respect to a Loan held in the form of a participation, the
participation documentation is legal, valid, binding and enforceable.
(b) Except as set forth in Section 4.20 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to any written or
oral (i) loan agreement, note or borrowing arrangement (including, without
limitation, leases, credit enhancements, commitments, guarantees and
interest-bearing assets) (collectively, "Loans"), under the terms of which the
obligor was, as of June 30, 1998, over 90 days delinquent in payment of
principal or interest or in default of any other provision, or (ii) Loan with
any director, executive officer or five percent or greater stockholder of the
Company or any of its Subsidiaries, or to the knowledge of the Company, any
person, corporation or enterprise controlling, controlled by or under common
control with any of the foregoing. Section 4.20 of the Company Disclosure
Schedule sets forth (i) all of the Loans of the Company or any of its
Subsidiaries that as of June 30, 1998, were classified by any bank examiner
(whether regulatory or internal) as "Other Loans Specially Mentioned", "Special
Mention", "Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit
Risk Assets", "Concerned Loans", "Watch List" or words of similar import,
together with the principal amount of and accrued and unpaid interest on each
such Loan and the identity of the borrower thereunder, (ii) by category of Loan
(i.e., commercial, consumer, etc.), all of the other Loans of the Company and
its Subsidiaries that as of June 30, 1998, were classified as such, together
with the aggregate principal amount of and accrued and unpaid interest on such
Loans by category and (iii) each asset of the Company that as of June 30, 1998,
was classified as "Other Real Estate Owned" and the book value thereof.
4.21 Property. Each of the Company and its Subsidiaries has good and
marketable title free and clear of all liens, encumbrances, mortgages, pledges,
charges, defaults or equitable interests to all of the properties and assets,
real and personal, tangible or intangible, which are reflected on the
consolidated statement of financial condition of the Company as of March 31,
1998 or acquired after such date, except (i) liens for taxes not yet due and
payable or contested in good faith by appropriate proceedings, (ii) pledges to
secure deposits and other liens incurred in the ordinary course of business,
(iii) such imperfections of title, easements and encumbrances, if any, as do not
interfere with the use of the respective property as such property is used on
the date of this Agreement, (iv) for dispositions and encumbrances of, or on,
such properties or assets in the ordinary course of business and (v) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar liens and encumbrances arising in the ordinary course of business. All
leases pursuant to which the Company or any Subsidiary of the Company, as
lessee, leases real or personal property are valid and enforceable in accordance
with their respective terms and neither
27
the Company nor any of its Subsidiaries nor, to the knowledge of the Company,
any other party thereto, is in default thereunder. All material tangible
properties of the Company and each of its Subsidiaries are in good state of
maintenance and repair, conform with all applicable ordinances, regulations and
zoning laws and are considered by the Company to be adequate for the current
business of the Company and its Subsidiaries.
4.22 Reorganization. The Company has no reason to believe that the Merger
will fail to qualify as a reorganization under Section 368(a) of the Code.
4.23 Antitakeover Provisions Inapplicable. The Board of Directors of the
Company has approved the transactions contemplated by this Agreement, the Bank
Merger and the Option Agreement such that the provisions of Section 203 of the
DGCL and Article Eighth of the Company's Certificate of Incorporation will not,
assuming the accuracy of the representations contained in Section 5.15 hereof,
apply to this Agreement, the Bank Merger, the Option Agreement or any of the
transactions contemplated hereby or thereby.
4.24 Insurance. The Company and its Subsidiaries are presently insured, and
since December 31, 1994, 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 its Subsidiaries are in full force and effect, the
Company and its Subsidiaries are not in default thereunder and all material
claims thereunder have been filed in due and timely fashion.
4.25 Investment Securities; Borrowings; Deposits. (a) Except for
investments in Federal Home Loan Bank Stock and pledges to secure Federal Home
Loan Bank borrowings and reverse repurchase agreements entered into in
arms-length transactions pursuant to normal commercial terms and conditions and
entered into the ordinary course of business and restrictions that exist for
securities to be classified as "held to maturity," none of the investments
reflected in the consolidated balance sheet of the Company included in the
Company's Report on Form 10-Q for the quarter ended March 31, 1998 and none of
the investment securities held by it or any of its Subsidiaries since March 31,
1998 is subject to any restriction (contractual or statutory) that would
materially impair the ability of the entity holding such investment freely to
dispose of such investment at any time.
(b) Neither the Company nor any Subsidiary is a party to or has
28
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 (A) are
referred to generically as "structured notes," "high risk mortgage derivatives,"
"capped floating rate notes" or "capped floating rate mortgage derivatives" or
(B) 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 Contracts and
other instruments legally purchased or entered into in the ordinary course of
business, consistent with regulatory requirements and listed (as of the date
hereof) in the Company Disclosure Schedule or disclosed in any Company Reports
filed on or prior to the date hereof.
(c) Set forth in the Company Disclosure Schedule is a true and correct list
of the Company's borrowed funds (excluding deposit accounts) as of the date
hereof.
(d) None of the deposits of the Company or any of its Subsidiaries is a
"brokered" deposit.
4.26 Indemnification. Except as provided in the Company Contracts or the
Certificate of Incorporation or by-laws of the Company, 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, to the best knowledge of the
Company, there are no claims for which any Covered Person would be entitled to
indemnification under the organization certificate or bylaws of the Company or
any Subsidiary of the Company, applicable law or regulation or any
indemnification agreement.
4.27 Liquidation Account. Neither the Merger nor the Bank Merger will
result in any payment or distribution payable out of the Liquidation Account of
the Company Bank.
4.28 Year 2000 Matters. Section 4.28 of the Company Disclosure Schedule
contains a true and correct copy of the Company's plan for addressing year 2000
computer issues (the "Year 2000 Plan"). The Company is in material compliance
with the Company's Year 2000 Plan. The Company has been examined by the OTS with
respect to being "Year 2000 Compliant" and the Company's Year 2000 Plan has been
reviewed by the OTS and the Company has received a "satisfactory" rating in
29
connection therewith, and neither the Company nor the Company Bank has received
any written communication from the OTS commenting adversely with respect to the
ability of the Company to become Year 2000 compliant.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Subject to Article III, Parent hereby represents and warrants to the
Company as follows:
5.1 Corporate Organization. (a) Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Parent has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary. Parent is duly registered as a savings and loan holding
company under the HOLA. The Certificate of Incorporation and By-laws of Parent,
copies of which have previously been made available to the Company, are true and
correct copies of such documents as in effect as of the date of this Agreement.
(b) Each Subsidiary of Parent that is a bank or savings institution (each a
"Parent Bank" and collectively, the "Parent Banks") is a bank or savings
institution, as the case may be, duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization. The deposit
accounts of the Parent Banks are insured by the FDIC through the Savings
Association Insurance Fund to the fullest extent permitted by law, and all
premiums and assessments required in connection therewith have been paid when
due. Each of Parent's other Subsidiaries which is a "Significant Subsidiary"
(each a "Significant Subsidiary" and together the "Significant Subsidiaries") as
such term is defined in Regulation S-X promulgated by the SEC is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Significant Subsidiary of Parent has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary. The articles of
incorporation, by-laws and other similar governing documents of the Parent
Banks, copies of which have previously been made
30
available to the Company, are true and correct copies of such documents as in
effect as of the date of this Agreement.
(c) The minute books of Parent and each of its Significant Subsidiaries
contain true and correct records of all meetings and other corporate actions
held or taken since December 31, 1995 of their respective stockholders and
Boards of Directors (including committees of their respective Boards of
Directors).
5.2 Capitalization. (a) As of the date of this Agreement, the authorized
capital stock of Parent consists of 45,000,000 shares of Parent Common Stock and
9,000,000 shares of preferred stock, par value $0.01 per share ("Parent
Preferred Stock"). As of June 30, 1998, there were 12,176,513 shares of Parent
Common Stock and no shares of Parent Preferred Stock issued and outstanding, and
2,374,587 shares of Parent Common Stock held in Parent's treasury. As of the
date of this Agreement, no shares of Parent Common Stock or Parent Preferred
Stock were reserved for issuance, except that (i)1,451,150 shares of Parent
Common Stock were reserved for issuance upon the exercise of stock options
pursuant to the Dime Community Bancorp, Inc. 1996 Stock Option Plan for Outside
Directors, Officers and Employees (the "Parent Stock Plan"), and (ii) 450,000
shares of Parent Series A Junior Participating Preferred Stock were reserved for
issuance upon exercise of the rights (the "Parent Rights") distributed to
holders of Parent Common Stock pursuant to the Shareholder Rights Agreement,
dated as of April 19, 1998, between Parent and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Parent Rights Agreement"). All of the issued and
outstanding shares of Parent Common Stock have been duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. As of the date of this
Agreement, except as referred to above or reflected in Section 5.2(a) of the
Parent Disclosure Schedule and the Parent Rights Agreement, Parent does not have
and is not bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of Parent Common Stock or Parent Preferred Stock or any other
equity securities of Parent or any securities representing the right to purchase
or otherwise receive any shares of Parent Common Stock or Parent Preferred
Stock. The shares of Parent Common Stock to be issued pursuant to the Merger
will be duly authorized and validly issued and, at the Effective Time, all such
shares will be fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof.
(b) Section 5.2(b) of the Parent Disclosure Schedule sets forth a true and
correct list of all of the Parent Subsidiaries as of the date of this Agreement.
Except as set forth in Section 5.2(b) of the Parent Disclosure Schedule, as of
the date of this
31
Agreement, Parent owns, directly or indirectly, all of the issued and
outstanding shares of capital stock of each of the Subsidiaries of Parent, free
and clear of all liens, charges, encumbrances and security interests whatsoever,
and all of such shares are duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. As of the date of this Agreement, no
Subsidiary of Parent has or is bound by any outstanding subscrip tions, options,
warrants, calls, commitments or agreements of any character with any party that
is not a direct or indirect Subsidiary of Parent calling for the purchase or
issuance of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or otherwise
receive any shares of capital stock or any other equity security of such
Subsidiary.
5.3 Authority; No Violation. (a) Parent has full corporate power and
authority to execute and deliver this Agreement and the Option Agreement and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Option Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly approved
by the Board of Directors of Parent, and no other corporate proceedings on the
part of Parent are necessary to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and (assuming due authorization, execution and
delivery by the Company) this Agreement constitutes a valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally.
(b) Except as set forth in Section 5.3(b) of the Parent Disclosure
Schedule, neither the execution and delivery of this Agreement by Parent, nor
the consummation by Parent of the transactions contemplated hereby, nor
compliance by Parent with any of the terms or provisions hereof, will (i)
violate any provision of the Certificate of Incorporation or By-Laws of Parent,
or the articles of incorporation or by-laws or similar governing documents of
any of its Subsidiaries or (ii) assuming that the consents and approvals
referred to in Section 5.4 are duly obtained, (x) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Parent or any of its Subsidiaries or any of their respective
properties or assets, or (y) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by, or result in
32
the creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the respective properties or assets of Parent or any of its
Subsidiaries under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Parent or any of its Subsidiaries is a party,
or by which they or any of their respective properties or assets may be bound or
affected.
5.4 Consents and Approvals. Except for (a) the filing of applications and
notices, as applicable, with the OTS under the HOLA, Bank Merger Act, Federal
Deposit Insurance Act and the rules and regulations of the OTS, and approval of
such applications and notices, (b) the State Banking Approvals, (c) the filing
with the SEC of the Proxy Statement and the filing and declaration of
effectiveness of the S-4, (d) the filing of the Certificate of Merger with the
Secretary pursuant to the DGCL, (e) such filings and approvals as are required
to be made or obtained under the securities or "Blue Sky" laws of various states
in connection with the issuance of the shares of Parent Common Stock pursuant to
this Agreement, (f) approval of the listing for quotation of the Parent Common
Stock to be issued in the Merger on the NASDAQ/NMS, and (g) such filings,
authorizations or approvals as may be set forth in Section 5.4 of the Parent
Disclosure Schedule, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary in connection
with (1) the execution and delivery by Parent of this Agreement and (2) the
consummation by Parent of the Merger and the other transactions contemplated
hereby.
5.5 Reports. Parent and each of its Subsidiaries have 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,
1995 with any Regulatory Agency, and have paid all fees and assessments due and
payable in connection therewith. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of Parent and its
Subsidiaries, and except as set forth in Section 5.5 of Parent Disclosure
Schedule, no Regulatory Agency has initiated any proceeding or, to the knowledge
of Parent, investigation into the business or operations of Parent or any of its
Subsidiaries since December 31, 1995. There is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of Parent or any of its Subsidiaries.
5.6 Financial Statements. Parent has previously made available to the
Company copies of (a) the consolidated balance sheets of Parent and its
Subsidiaries as of June 30 for the fiscal years 1996 and 1997 and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1995 through 1997, inclusive, as reported in Parent's
Annual Report on Form 10-K for the fiscal year
33
ended June 30, 1997 filed with the SEC under the Exchange Act, in each case
accompanied by the audit report of Deloitte & Touche LLP independent public
accountants with respect to Parent, and (b) the unaudited consolidated balance
sheet of Parent and its Subsidiaries as of March 31, 1998 and March 31, 1997 and
the related unaudited consolidated statements of income, changes in
stockholders' equity and cash flows for the nine-month periods then ended as
reported in Parent's Quarterly Report on Form 10-Q for the period ended March
31, 1998 filed with the SEC under the Exchange Act. The June 30, 1997
consolidated balance sheet of Parent (including the related notes, where
applicable) fairly presents the consolidated financial position of Parent and
its Subsidiaries as of the date thereof, and the other financial statements
referred to in this Section 5.6 (including the related notes, where applicable)
fairly present and the financial statements to be filed with the SEC after the
date hereof will fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount), the
results of the consolidated operations and changes in stockholders' equity and
consolidated financial position of Parent and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth; each
of such statements (including the related notes, where applicable) complies, and
the financial statements to be filed with the SEC after the date hereof will
comply, with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto; and each of such statements
(including the related notes, where applicable) has been, and the financial
statements to be filed with the SEC after the date hereof will be, prepared in
accordance with GAAP consistently applied during the periods involved, except as
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of Parent and its Significant
Subsidiaries have been, and are being, maintained in accordance with GAAP and
any other applicable legal and accounting requirements.
5.7 Broker's Fees. Neither Parent nor any Subsidiary of Parent, nor any of
their respective officers or directors, has employed any broker or finder or
incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement, except
that Parent has engaged, and will pay a fee or commission to, Xxxxxxx Xxxxx &
Co. ("Xxxxxxx Xxxxx").
5.8 Absence of Certain Changes or Events. Except as may be set forth in
Section 5.8 of the Parent Disclosure Schedule, or as disclosed in any Parent
Report (as defined in Section 5.12) filed with the SEC prior to the date of this
Agreement, since June 30, 1997, there has been no change or development or
combination of changes or developments which, individually or in the aggregate,
has had a Material Adverse Effect on Parent.
34
5.9 Legal Proceedings. (a) Except as set forth in Section 5.9(a) of the
Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries is a
party to any and there are no pending or, to Parent's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against Parent or any of
its Subsidiaries or challenging the validity or propriety of the transactions
contemplated by this Agreement.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction imposed upon Parent, any of its Subsidiaries or the assets of Parent
or any of its Subsidiaries.
5.10 Taxes. Except as set forth in Section 5.10 of the Parent Disclosure
Schedule, each of Parent and its Subsidiaries has (i) duly and timely filed
(including applicable extensions granted without penalty) all material Tax
Returns required to be filed at or prior to the Effective Time, and such Tax
Returns are true and correct in all material respects, and (ii) paid in full or
made adequate provision in the financial statements of Parent (in accordance
with GAAP) for all material Taxes shown to be due on such Tax Returns. Except as
set forth in Section 5.10 of the Parent Disclosure Schedule, (i) as of the date
hereof, neither Parent nor any of its Subsidiaries has requested any extension
of time within which to file any Tax Returns in respect of any fiscal year which
have not since been filed and no request for waivers of the time to assess any
Taxes are pending or outstanding, and (ii) as of the date hereof, with respect
to each taxable period of Parent and its Subsidiaries, the federal and state
income Tax Returns of Parent and its Subsidiaries have been audited by the
Internal Revenue Service or appropriate state tax authorities or the time for
assessing and collecting income Tax with respect to such taxable period has
closed and such taxable period is not subject to review. Except as set forth in
Section 5.10 of the Parent Disclosure Schedule, neither the Parent nor any of
its Subsidiaries (i) has made an election under Section 341(f) of the Code, (ii)
has made any payment, is obligated to make any payment, or is party to any
agreement that could obligate it to make any payment that would not be
deductible under Section 280G of the Code, (iii) has issued or assumed any
obligation under Section 279 of the Code, any high yield discount obligation as
described in Section 163f(i) of the Code or any registration-required obligation
within the meaning of Section 163f(2) of the Code that is not in registered
form, or (iv) is or has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code.
5.11 Employees. (a) Section 5.11(a) of the Parent Disclosure Schedule sets
forth a true and correct list of each deferred compensation plan, incentive
compensation plan, equity compensation plan, "welfare" plan, fund or program
(within the meaning
35
of section 3(1) of the ERISA); "pension" plan, fund or program (within the
meaning of section 3(2) of ERISA) that is sponsored, maintained or contributed
to or required to be contributed to as of the date of this Agreement by, or with
respect to which an obligation or liability exists of (the "Parent Plans"),
Parent, any of its Subsidiaries or any trade or business, whether or not
incorporated (a "Parent ERISA Affiliate"), all of which together with Parent
would be deemed a "single employer" within the meaning of Section 4001 of ERISA,
for the benefit of any employee or former employee of Parent, any Subsidiary or
any Parent ERISA Affiliate and includes a true and correct copy of the plan
document for the Severance Pay Plan of the Parent currently in effect.
(b) Except as set forth in Section 5.11(b) of the Parent Disclosure
Schedule: each of the Parent Plans is in compliance with applicable law,
including but not limited to, the Code and ERISA; each of the Parent Plans
intended to be "qualified" within the meaning of section 401(a) of the Code has
received a favorable determination letter from the IRS; no Parent Plan has an
accumulated or waived funding deficiency within the meaning of section 412 of
the Code; neither Parent nor any Parent ERISA Affiliate has incurred, directly
or indirectly, any liability to or on account of a Parent Plan pursuant to Title
IV of ERISA (other than PBGC premiums); to the knowledge of Parent no
proceedings have been instituted to terminate any Parent Plan that is subject to
Title IV of ERISA; no "reportable event," as such term is defined in section
4043(c) of ERISA, has occurred with respect to any Parent Plan (other than a
reportable event with respect to which the thirty day notice period has been
waived); and no condition exists that presents a material risk to Parent of
incurring a liability to or on account of a Parent Plan pursuant to Title IV of
ERISA; no Parent Plan is a multiemployer plan (within the meaning of section
4001(a)(3) of ERISA and no Parent Plan is a multiple employer plan as defined in
Section 413 of the Code; there are no pending, or, to the knowledge of Parent,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Parent Plans or any trusts related thereto; the
fair market value of the assets of each Plan subject to Title IV of ERISA
exceeds the present value of the benefit liabilities (as defined in Section
4001(a)(16) of ERISA) under such Plan as of the most recent plan year end prior
to the date hereof, calculated using the actuarial assumptions used in the most
recent actuarial valuation of such Plan as of the date hereof; with respect to
each qualified plan which is an employee stock ownership plan (as defined in
Section 4975(e)(7) of the Code), any assets of any such plan that are not
allocated to participants' individual accounts are pledged as security for, and
may be applied to satisfy, any securities acquisition indebtedness; and there is
not currently any legally binding commitment by the Parent or any ERISA
Affiliate to create an additional Plan or amend any Plan (except amendments to
comply with law which do not materially increase the cost of such Plan) and the
Parent and its subsidiaries do not have any obligations for post-retirement or
post-employment welfare benefits that
36
cannot be amended or terminated upon sixty days' notice or less without
incurring any liability thereunder, except for coverage required by Part 6 of
Title 1 of ERISA or Section 4980B of the Code, the premium cost of which is
borne (to the extent permitted by law) by the insured individuals.
5.12 SEC Reports. Parent has previously made available to the Company a
true and correct copy of each (a) final registration statement, prospectus,
report, schedule and definitive proxy statement filed since December 31, 1995 by
Parent with the SEC pursuant to the Securities Act or the Exchange Act (the
"Parent Reports") and (b) communication mailed by Parent to its stockholders
since December 31, 1995, and no such registration statement, prospectus, report,
schedule, proxy statement or communication contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that information
as of a later date shall be deemed to modify information as of an earlier date.
Parent has timely filed all Parent Reports and other documents required to be
filed by it under the Securities Act and the Exchange Act, and, as of their
respective dates, all Parent Reports complied with the published rules and
regulations of the SEC with respect thereto.
5.13 Parent Information. The information relating to Parent and its
Subsidiaries to be contained in the Proxy Statement and the S-4, or in any other
document filed with any other regulatory agency in connection herewith, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they are made, not misleading. The Proxy Statement (except for such portions
thereof that relate only to the Company or any of its Subsidiaries) will comply
with the provisions of the Exchange Act and the rules and regulations
thereunder. The S-4 will comply with the provisions of the Securities Act and
the rules and regulations thereunder.
5.14 Compliance with Applicable Law. Parent and each of its Subsidiaries
holds, and has at all times held, all licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and have complied with and are not in default in any
respect under any, applicable law, statute, order, rule, regulation, policy
and/or guideline of any Governmental Entity relating to Parent or any of its
Subsidiaries and neither Parent nor any of its Subsidiaries knows of, or has
received notice of violation of, any violations of any of the above.
5.15 Ownership of Company Common Stock; Affiliates and Associates. (a)
Neither Parent nor any of its affiliates or associates (as such terms are
defined under the
37
Exchange Act) beneficially owns, directly or indirectly, or is a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, any shares of capital stock of the Company (other than
Trust Account Shares and DPC Shares); and
(b) Neither Parent nor any of its Subsidiaries is an "affiliate" (as such
term is defined in DGCL ss.203(c)(1)) or an "associate" (as such term is defined
in DGCL ss.203(c)(2)) of the Company or an "Interested Stockholder" (as such
term is defined in Article Eighth of the Company's Certificate of
Incorporation).
5.16 Agreements with Regulatory Agencies. Neither Parent nor any of its
Subsidiaries is subject to any cease-and-desist or other order issued by, or is
a party to any written agreement, consent agreement or memorandum of
understanding with, or is 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 (each, whether or not set forth in Section 5.16 of the Parent
Disclosure Schedule, a "Parent Regulatory Agreement"), any Governmental Entity
that restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business, nor has
Parent or any of its Subsidiaries been advised by any Governmental Entity that
it is considering issuing or requesting any Parent Regulatory Agreement.
5.17 Environmental Matters. Except as set forth in Section 5.17 of the
Parent Disclosure Schedule:
(a) Each of Parent and its Subsidiaries, each of the Participation
Facilities and, to the knowledge of Parent, the Loan Properties (each as
hereinafter defined), are in compliance with all Environmental Laws;
(b) There is no suit, claim, action or proceeding, pending or, to the
knowledge of Parent, threatened, before any Governmental Entity or other forum
in which Parent, any of its Subsidiaries, any Participation Facility or any Loan
Property, has been or, with respect to threatened proceedings, may be, named as
a defendant (x) for alleged noncompliance (including by any predecessor) with
any Environmental Laws, or (y) relating to the release, threatened release or
exposure to any Hazardous Material whether or not occurring at or on a site
owned, leased or operated by Parent or any of its Subsidiaries, any
Participation Facility or any Loan Property;
(c) To the knowledge of Parent during the period of (x) Parent's or any of
its Subsidiaries' ownership or operation of any of their respective current or
38
former properties, (y) Parent's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) Parent's or any of its
Subsidiaries' interest in a Loan Property, there has been no release of
Hazardous Materials in, on, under or affecting any such property. To the
knowledge of Parent, prior to the period of (x) Parent's or any of its
Subsidiaries' ownership or operation of any of their respective current or
former properties, (y) Parent's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) Parent's or any of its
Subsidiaries' interest in a Loan Property, there was no release of Hazardous
Materials in, on, under or affecting any such property, Participation Facility
or Loan Property; and
(d) The following definitions apply for purposes of this Section 5.17: (x)
"Loan Property" means any property in which Parent or any of its Subsidiaries
holds a security interest, and, where required by the context, said term means
the owner or operator of such property; and (y) "Participation Facility" means
any facility in which Parent or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such property.
5.18 Opinion. Prior to the execution of this Agreement, Parent has received
an opinion from Xxxxxxx Xxxxx to the effect that as of the date thereof and
based upon and subject to the matters set forth therein, the Merger
Consideration pursuant to this Agreement is fair from a financial point of view
to Parent. Such opinion has not been amended or rescinded as of the date of this
Agreement.
5.19 Approvals. As of the date of this Agreement, Parent knows of no reason
why all regulatory approvals required for the consummation of the transactions
contemplated hereby (including, without limitation, the Merger) should not be
obtained.
5.20 Loan Portfolio. Except as set forth in Section 5.20 of Parent
Disclosure Schedule, neither Parent nor any of its Subsidiaries is a party to
any written or oral (i) Loan, other than Loans the unpaid principal balance of
which does not exceed $250,000, under the terms of which the obligor was, as of
June 30, 1998, over 90 days delinquent in payment of principal or interest or in
default of any other provision, or (ii) Loan with any director, executive
officer or five percent or greater stockholder of Parent or any of its
Subsidiaries, or to the knowledge of Parent, any person, corporation or
enterprise controlling, controlled by or under common control with any of the
foregoing. Section 5.20 of Parent Disclosure Schedule sets forth (i) all of the
Loans in original principal amount in excess of $250,000 of Parent or any of its
Subsidiaries that as of June 30, 1998, were classified by any bank examiner
(whether regulatory or internal) as "Other Loans Specially Mentioned", "Special
Mention", "Substandard", "Doubtful", "Loss", "Classified", "Criticized", "Credit
Risk Assets", "Concerned Loans", "Watch List" or
39
words of similar import, together with the principal amount of and accrued and
unpaid interest on each such Loan and the identity of the borrower thereunder,
(ii) by category of Loan (i.e., commercial, consumer, etc.), all of the other
Loans of Parent and its Subsidiaries that as of June 20, 1998, were classified
as such, together with the aggregate principal amount of and accrued and unpaid
interest on such Loans by category and (iii) each asset of Parent that as of
June 30, 1998, was classified as "Other Real Estate Owned" and the book value
thereof.
5.21 Property. Each of Parent and its Subsidiaries has good and marketable
title free and clear of all liens, encumbrances, mortgages, pledges, charges,
defaults or equitable interests to all of the properties and assets, real and
personal, tangible or intangible, and which are reflected on the consolidated
statement of financial condition of Parent as of March 31, 1998 or acquired
after such date, except (i) liens for taxes not yet due and payable or contested
in good faith by appropriate proceedings, (ii) pledges to secure deposits and
other liens incurred in the ordinary course of business, (iii) such
imperfections of title, easements and encumbrances, if any, as do not interfere
with the use of the respective property as such property is used on the date of
this Agreement, (iv) for dispositions and encumbrances of, or on, such
properties or assets in the ordinary course of business or (v) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carrier's and other
similar liens and encumbrances arising in the ordinary course of business. All
leases pursuant to which Parent or any Subsidiary of Parent, as lessee, leases
real or personal property are valid and enforceable in accordance with their
respective terms and neither Parent nor any of its Subsidiaries nor, to the
knowledge of Parent, any other party thereto is in default thereunder. All
material tangible properties of the Parent and each of its Subsidiaries are in
good state of maintenance and repair, conform with all applicable ordinances,
regulations and zoning laws and are considered by the Parent to be adequate for
the current business of the Parent and its Subsidiaries.
5.22 Reorganization. Parent has no reason to believe that the Merger will
fail to qualify as a reorganization under Section 368(a) of the Code.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1 Covenants of the Company. Except as expressly provided in this
Agreement or the Stock Option Agreement, during the period from the date of this
Agreement to the Effective Time, the Company shall use commercially reasonable
40
efforts to, and shall cause its Subsidiaries to use commercially reasonable
efforts to, (i) conduct its business in the ordinary and usual course consistent
with past practices and prudent banking practice; (ii) 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 Company, the Company Bank, the Parent or the Parent Bank to perform
its covenants and agreements on a timely basis under this Agreement, and (iv)
take no action which would adversely affect or delay the ability of the Company,
the Company Bank, the Parent or the Parent Bank to obtain any necessary
approvals, consents or waivers of any governmental authority required for the
transactions contemplated hereby or which would reasonably be expected to result
in any such approvals, consents or waivers containing any material condition or
restriction. Without limiting the generality of the foregoing, and except as set
forth in Section 6.1 of the Company Disclosure Schedule or as otherwise
specifically provided by this Agreement, the Stock Option Agreement or consented
to in writing by Parent, the Company shall not, and shall not permit any of its
Subsidiaries to:
(a) solely in the case of the Company, declare or pay any dividends on, or
make other distributions in respect of, any of its capital stock, other than
normal quarterly dividends not in excess of $0.125 per share of Company Common
Stock; provided, however, that if the joint venture known as AFT Associates, of
which the Company's indirect wholly owned subsidiary, FinFed Development Corp.,
is a joint venture partner, sells 100% of its interest in the property described
in Section 6.1(a) of the Company Disclosure Letter or if FinFed Development
Corp. sells 100% of its interest in AFT Associates (in either case without
recourse to the Company or any of its Subsidiaries and without the Company or
any of its Subsidiaries providing any financing therefor) prior to the Closing,
then the Company may pay a special one-time dividend (the "Special Dividend")
prior to the Closing in the following amount: (i) if the cash proceeds (received
in the form of a certified check or immediately available funds) of such sale
(net of transaction expenses and transfer taxes, if any) are greater than or
equal to the book value of such assets on the Company's books and records, net
of any specific reserves established by either FinFed Development Corp. or the
Company Bank as of March 31, 1998, as set forth in Section 6.1(a) of the Company
Disclosure Letter ("Book Value"), the Special Dividend may be paid in the
aggregate amount of the product of the Outstanding Shares Number and $1.00, or
(ii) if the cash proceeds (received in the form of a certified check or
immediately available funds) of such sale are less than the Book Value, then the
Special Dividend may be paid in an aggregate amount equal to the amount by which
(A) the product of the Outstanding Shares Number and $1.00 exceeds (B) the
difference between the Book Value and the cash proceeds of such sale; provided,
further that such sale may not occur without the prior written consent of the
41
Parent if such sale would result in the amount set forth in (B) exceeding the
amount set forth in (A).
(b) (i) repurchase, redeem or otherwise acquire (except for the acquisition
of Trust Account Shares and DPC Shares, as such terms are defined in Section
1.4(b) hereof) any shares of the capital stock of the Company or any Subsidiary
of the Company, or any securities convertible into or exercisable for any shares
of the capital stock of the Company or any Subsidiary of the Company, (ii)
split, combine or reclassify any shares of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (iii) issue, deliver
or sell, or authorize or propose the issuance, delivery or sale of, any shares
of its capital stock or any securities convertible into or exercisable for, or
any rights, warrants or options to acquire, any such shares, or enter into any
agreement with respect to any of the foregoing, except, in the case of clauses
(ii) and (iii), for the issuance of Company Common Stock upon the exercise or
fulfillment of rights or options issued or existing pursuant to the Option
Agreement, the Company Option Plans or any employee benefit plans, programs or
arrangements, all to the extent outstanding and in existence on the date of this
Agreement and in accordance with their present terms;
(c) amend its Certificate of Incorporation, By-laws or other similar
governing documents;
(d) (i) initiate, solicit or encourage, directly or indirectly, any
inquiries or the making of any proposal or offer (including, without limitation,
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 more
than 10% of the assets or any equity securities of the Company of any of its
material Subsidiaries (any such proposal or offer being hereinafter referred to
as an "Acquisition Proposal") or, (ii) engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person relating to an Acquisition Proposal; provided, however, that nothing
contained in this Agreement shall prevent the Company or its Board of Directors
from (i) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal or (ii)(A) providing information in response
to a request therefor by a person who has made an unsolicited bona fide written
Acquisition Proposal if the Board of Directors receives from the person so
requesting such information an executed confidentiality agreement on terms
substantially equivalent to those contained in the confidentiality agreement
between Parent and the Company, dated as of June 17, 1998; or (B) engaging in
any negotiations or discussions with any person who has made an unsolicited bona
fide written Acquisition Proposal, if and only
42
to the extent that, in each such case referred to in clause (A) or (B) above,
(i) the Board of Directors of the Company, after consultation with outside legal
counsel, in good xxxxx xxxxx such action to be legally necessary for the proper
discharge of its fiduciary duties under applicable law and (ii) the Board of
Directors of the Company determines in good faith (after consultation with its
financial advisor) that such Acquisition Proposal, if accepted, is reasonably
likely to be consummated, taking into account all legal, financial and
regulatory aspects of the proposal and the person making the proposal and would,
if consummated, result in a more favorable transaction than the transaction
contem plated by this Agreement; provided further, however, that the Company may
communi cate information about any such Acquisition Proposal to its stockholders
if, in the judgment of the Company's Board of Directors, based upon the advice
of outside counsel, such communication is required under applicable law. The
Company will notify Parent immediately orally (within one day) and in writing
(within 3 days) 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 after the date hereof, and
the identity of the person making such inquiry, proposal or offer and the
substance thereof and will keep Parent informed of any developments with respect
thereto immediately upon occurrence thereof. Subject to the foregoing, 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. The Company and its Subsidiaries will take
the necessary steps to inform their respective officers, directors, agents, and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it) of the obligations undertaken in this Section
6.1(d). The Company will promptly request each person (other than Parent) that
has executed a confidentiality agreement prior to the date hereof in connection
with its consideration of a business combination with the Company or any of its
Subsidiaries to return or destroy all confidential information previously
furnished to such person by or on behalf of the Company or any of its
Subsidiaries. The Company shall take all steps necessary to enforce all such
confidentiality agreements.
(e) make any capital expenditures other than those which (i) are made in
the ordinary course of business or are necessary to maintain existing assets in
good repair and (ii) in any event are in an amount of no more than $50,000 in
the aggregate;
(f) enter into any new line of business;
(g) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other
43
business organization or division thereof or otherwise acquire any assets, which
would be material, individually or in the aggregate, to the Company, other than
in connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt re structurings in the ordinary course of business consistent with
past practices;
(h) take any action that is intended or may reasonably be expected to
result in any of the conditions to the Merger set forth in Article VIII not
being satisfied;
(i) change its methods of accounting in effect at March 31, 1998, except as
required by changes in GAAP or regulatory accounting principles as concurred in
writing by the Company's independent auditors;
(j) (i) except as set forth in Section 7.12 hereof, as required by
applicable law or as required to maintain qualification pursuant to the Code,
adopt, amend, or terminate any employee benefit plan (including, without
limitation, any Plan) or any agreement, arrangement, plan, trust, other funding
arrangement or policy between the Company or any Subsidiary of the Company and
one or more of its current or former directors, officers, employees or
independent contractors except as required pursuant to irrevocable commitments
existing on the date of this Agreement, change any trustee or custodian of the
assets of any plan or transfer plan assets among trustees or custodians except
that the Company may adopt the severance policy and pay retention bonuses, in
each case as described in Section 6.1(j) of the Company Disclosure Schedule,
(ii) except for normal salary increases in the ordinary course of business
consistent with past practice, which increases do not exceed 5% of annual rate
of base salary in effect on the date of this Agreement in any individual case or
except as required by applicable law, increase or accelerate payment of in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any Plan or agreement as in effect as of the
date hereof; provided, however, that nothing contained herein shall prohibit the
Company from (x) committing to pay retention bonuses as described in Section
6.1(j) of the Company Disclosure Schedule, or (y) paying, on or immediately
prior to the Closing Date, discretionary bonuses in respect of fiscal 1998 such
that the aggregate amount of all such bonuses in respect of fiscal 1998 does not
exceed $291,000 and in individual amounts to be mutually agreed upon by Parent
and the Board of Directors of the Company, provided, however, that Parent's
agreement shall not be unreasonably withheld or (ii) grant or award any stock
options, stock appreciation rights, restricted stock, restricted stock units or
performance units or shares;
(k) other than activities in the ordinary course of business consistent
with past practice, sell, lease, encumber, assign or otherwise dispose of, or
agree to sell,
44
lease, encumber, assign or otherwise dispose of, any of its material assets,
properties or other rights or agreements except as otherwise specifically
contemplated by this Agreement;
(l) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity;
(m) file any application to relocate or terminate the operations of any
banking office of it or any of its Subsidiaries;
(n) create, renew, amend or terminate or give notice of a proposed renewal,
amendment or termination of, any material contract, agreement or lease for
goods, services or office space to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or their
respective properties is bound, other than the renewal in the ordinary course of
business of any lease the term of which expires prior to the Closing Date;
(o) other than in the ordinary course of business consistent with past
practice, in individual amounts not to exceed $25,000, and other than
investments for the Company's portfolio made in accordance with Section 6.1(p),
make any investment either by purchase of stock or securities, contributions to
capital, property transfers or purchase of any property or assets of any other
individual, corporation or other entity;
(p) make any investment in any debt security, including mortgage-backed and
mortgage related securities, other than US government and US government agency
securities with final maturities not greater than five years or mortgage-backed
or mortgage related securities which would not be considered "high risk"
securities pursuant to Thrift Bulletin Number 52 issued by the OTS, that are
purchased in the ordinary course of business with past practice;
(q) other than as set forth on Schedule 6.1(j), enter into or terminate any
contract or agreement, or make any change in any of its leases or contracts,
other than 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 per
annum and other than contracts or agreements covered by Section 6.1(t);
(r) settle any claim, action or proceeding involving any liability of the
Company or any of its Subsidiaries for money damages in excess of $50,000 or
45
involving any material restrictions upon the operations of the Company or any of
its Subsidiaries;
(s) except in the ordinary course of business and in amounts less than
$100,000, waive or release any material right or collateral or cancel or
compromise any extension of credit or other debt or claim;
(t) make, renegotiate, renew, increase, extend, modify or purchase any (i)
loan, lease (credit equivalent), advance, credit enhancement or other extension
of credit, or make any commitment in respect of any of the foregoing, except (A)
with respect to one- to four-family owner-occupied residential mortgage loans,
originations or refinancings of adjustable rate loans with maturities not to
exceed 30 years and fixed-rate loans with maturities not to exceed 15 years, in
each case made in strict compliance with underwriting guidelines established by
either the Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation; (B) with respect to multi-family loans, originations or
refinancing in amounts up to $400,000 in accordance with the following lending
policies: (I) collateral consisting of multi-family buildings only within the 5
boroughs of New York City and Nassau County, (II) debt service ratios not less
than 1.2 based upon actual cash flows at the time of underwriting (accounting
for normal vacancy and attributing no increase for potential future increases),
(III) loan-to-value ratios not greater than 75% based upon appraisals performed
by licensed real estate appraisers carrying the "MAI" designation, and based
upon cash flows as described above regarding computation of debt service ratios,
(IV) personal guarantees of the borrower and (V) verification of rents with the
NYC Department of Housing and Community Renewal where apartment rents are
subject to statutory control; (C) with respect to construction loans, only the
continuation of disbursements of proceeds in connection with existing loans in
process, but only subsequent to adequate due diligence regarding the stage of
project completion; (D) with respect to loans secured by mixed-use properties or
by commercial income-producing properties, originations or refinancings in
amounts up to $250,000 with valuations and debt service coverage ratios that are
based upon actual rent rolls made in strict compliance with the loan-to-value
ratios and debt service ratios set forth in the Company's current Board-approved
loan policy manual; (E) with respect to consumer loans, originations or
refinancings in the ordinary course of business upon terms and in aggregate
monthly volumes that do not differ materially from past practice; or (F) loans
or advances as to which the Company has a legally binding obligation to make as
of the date hereof and a description of which has been provided by the Company
in writing to Parent prior to the execution of this Agreement; provided, that
all new loan commitments made by the Company between the date hereof and the
Closing, as permitted by clauses (A) through (D) above, shall not aggregate more
than $8 million in any single month, and no more than $25 million in
46
the aggregate; and provided further, however, that the Company may not make,
renegotiate, renew, increase, extend, modify or purchase any loan that is
underwritten based on either no or limited verification of income or otherwise
without full documentation customary for such a loan; (ii) unsecured commercial
loans; or (iii) loans, advances or commitments to employees, directors, officer
or other affiliated parties of the Company or any of its Subsidiaries;
(u) incur any additional borrowings beyond those set forth in the Company
Disclosure Letter other than short-term (with a final maturity of two years or
less) Federal Home Loan Bank borrowings and reverse repurchase agreements
consistent with past practice, or pledge any of its assets to secure any
borrowings other than as required pursuant to the terms of borrowings of the
Company or any Subsidiary in effect at the date hereof or in connection with
borrowings or reverse repurchase agreements permitted hereunder. Deposits shall
not be deemed to be borrowings within the meaning of this paragraph;
(v) except for advances in the ordinary course to fund the carrying costs
of the properties held in AFT Associates up to $50,000 in the aggregate, make
any investment or commitment to invest in real estate or in any real estate
development project, other than real estate acquired in satisfaction of
defaulted mortgage loans and investments or commitments approved by the Board of
Directors of the Company prior to the date of this Agreement and disclosed in
writing to Parent;
(w) except pursuant to commitments existing at the date hereof which have
previously been disclosed in writing to the Parent, make any real estate loans
secured by undeveloped land or real estate located outside the State of New York
or make any construction loan;
(x) establish or make any commitment relating to the establishment of any
new branch or other office facilities other than those for which all regulatory
approvals have been obtained; with respect to any such new branch or other
office facility for which regulatory approval has been received, make any
capital expenditures that in the aggregate would exceed $50,000;
(y) except for advances in the ordinary course to fund the carrying costs
of the properties held in AFT Associates up to $50,000 in the aggregate,
organize, capitalize, lend to or otherwise invest in any Subsidiary, or invest
in or acquire a 10% or greater equity or voting interest in any firm,
corporation or business enterprise;
(z) elect to the Board of Directors of the Company any person who
47
is not a member of the Board of Directors of the Company as the last Company
Report; or
(aa) agree to do any of the foregoing.
6.2 Covenants of Parent. Except as expressly provided in this Agreement,
during the period from the date of this Agreement to the Effective Time, the
Parent shall use commercially reasonably efforts to, and shall cause its
Subsidiaries to use commercially reasonable efforts to, (i) conduct its business
in the ordinary and usual course consistent with past practices and prudent
banking practice, (ii) 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 or the Parent to perform it
covenants and agreements on a timely basis under this Agreement, and (iv) take
no action which would adversely affect or delay the ability of the Company, the
Parent, the Company Bank or the Parent Bank to obtain any necessary approvals,
consents or waivers of any governmental authority required for the transactions
contemplated hereby or which would reasonably be expected to result in any such
approvals, consents or waivers containing any material condition or restriction.
Without limiting the generality of the foregoing, and except as set forth in
Section 6.2 of the Parent Disclosure Schedule or as otherwise specifically
provided by the Agreement or consented to in writing by the Company, Parent
shall not, and shall not permit any of its Subsidiaries to:
(a) solely in the case of Parent, declare or pay any dividends on or
make any other distributions in respect of any of its capital stock other
than its current quarterly dividends; provided, however, that nothing
contained herein shall prohibit Parent from increasing the quarterly cash
dividend on the Parent Common Stock up to $0.15 per share;
(b) take any action that is intended or may reasonably be expected to
result in any of the conditions to the Merger set forth in Article VIII not
being satisfied;
(c) change its methods of accounting in effect at March 31, 1998,
except in accordance with changes in GAAP or regulatory accounting
principles as concurred to by Parent's independent auditors; or
(d) agree to do any of the foregoing.
48
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Regulatory Matters. (a) Parent and the Company shall promptly prepare
and file with the SEC the Proxy Statement and Parent shall promptly prepare and
file with the SEC the S-4, in which the Proxy Statement will be included as a
prospectus. Each of the Company and Parent shall use its reasonable best efforts
to have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing, and the Company shall thereafter mail the Proxy
Statement to its stockholders. Parent shall also use its reasonable best efforts
to obtain all necessary state securities law or "Blue Sky" permits and approvals
required to carry out the transactions contemplated by this Agreement.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement (including without limitation the Merger). The Company and Parent
shall have the right to review in advance, and to the extent practicable each
will consult the other on, in each case subject to applicable laws relating to
the exchange of information, all the information relating to the Company or
Parent, as the case may be, and any of their respective Subsidiaries, which
appears in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein.
(c) Parent and the Company shall, upon request, furnish each other with all
information concerning themselves, their Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with the Proxy Statement, the S-4 or any other statement, filing,
notice or
49
application made by or on behalf of Parent, the Company or any of their
respective Subsidiaries to any Governmental Entity in connection with the Merger
and the other transactions contemplated by this Agreement.
(d) Parent and the Company shall promptly furnish each other with copies of
written communications received by Parent or the Company, as the case may be, or
any of their respective Subsidiaries, Affiliates or Associates (as such terms
are defined in Rule 12b-2 under the Exchange Act as in effect on the date of
this Agreement) from, or delivered by any of the foregoing to, any Governmental
Entity in respect of the transactions contemplated hereby.
7.2 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, each party shall, and
shall cause each of its Subsidiaries to, afford to the officers, employees,
accountants, counsel and other representatives of the other party, access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives and, during such period, it
shall, and shall cause its Subsidiaries to, make available to the other party
all information concerning its business, properties and personnel as the other
party may reasonably request.
Neither party nor any of its Subsidiaries shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of its customers, jeopardize any attorney-client
privilege or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) All information furnished pursuant to Section 7.2(a) shall be subject
to, and each of the Company and Parent shall hold all such information in
confidence in accordance with, the provisions of the confidentiality agreement,
dated June 17, 1998 (the "Confidentiality Agreement"), between Parent and the
Company.
(c) No investigation by either of the parties or their respective
representatives shall affect the representations, warranties, covenants or
agreements of the other set forth herein.
7.3 Stockholder Meeting. The Company shall take all steps necessary to duly
call, give notice of, convene and hold a meeting of its stockholders to be held
as
50
soon as is reasonably practicable after the date on which the S-4 becomes
effective for the purpose of voting upon the approval and adoption of this
Agreement and the consummation of the transactions contemplated hereby. The
Company will, through its Board of Directors, except to the extent legally
required for the discharge by the Board of Directors of its fiduciary duties as
advised by such Board's legal counsel subject to the fiduciary duties of such
board, recommend to its stockholders approval of this Agreement and the
transactions contemplated hereby and such other matters as may be submitted to
its stockholders in connection with this Agreement.
7.4 Legal Conditions to Merger. Each of Parent and the Company shall, and
shall cause its Subsidiaries to, use their reasonable best efforts (a) to take,
or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party or its
Subsidiaries with respect to the Merger and, subject to the conditions set forth
in Article VIII hereof, to consummate the transactions contemplated by this
Agreement and (b) to obtain (and to cooperate with the other party to obtain)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by the Company or Parent or any of their respective Subsidiaries in connection
with the Merger and the other transactions contemplated by this Agreement, and
to comply with the terms and conditions of such consent, authorization, order or
approval.
7.5 Affiliates. Promptly, but in any event within two weeks after the
execution and delivery of this Agreement, the Company shall deliver to the
Parent a letter identifying all persons who, to the knowledge of the Company,
may be deemed to be "affiliates" of the Company under Rule 145 of the Securities
Act, including, without limitation , all directors and executive officers of the
Company, together with executed letter agreements, each substantially in the
form of Exhibit B hereto, executed by each such person so identified as an
affiliate of the Company agreeing (i) to comply with Rule 145 and (ii) to be
present in person or by proxy and vote in favor of the Merger at the Company's
stockholders meeting.
7.6 Stock Exchange Listing. Parent shall use its reasonable best efforts to
cause the shares of Parent Common Stock to be issued in the Merger to be
approved for listing for quotation on the NASDAQ/NMS, subject to official notice
of issuance, as of the Effective Time.
7.7 Employee Benefit Plans; Existing Agreements. (a) As of or as soon as
practicable following the Effective Time, the employees of the Company and its
Subsidiaries (the "Company Employees") shall be eligible to participate in the
employee
51
benefit plans of Parent and its Subsidiaries in which similarly situated
employees of Parent or Parent Bank participate, to the same extent as similarly
situated employees of Parent or Parent Bank (it being understood that inclusion
of Company Employees in such employee benefit plans may occur at different times
with respect to different plans and that participation of Company employees in
an analogous Company Plan shall be continued until such time). The Company
agrees to take any necessary actions to cease benefit accruals under any Plan
that is a tax-qualified defined benefit plan as of the Effective Date.
(b) With respect to each Parent Plan, for purposes of determining
eligibility to participate, vesting, and entitlement to benefits, including for
severance benefits and vacation entitlement (but not for accrual of pension
benefits), service with the Company (or predecessor employers to the extent the
Company provides past service credit) shall be treated as service with Parent;
provided, however, that such service shall not be recognized to the extent that
such recognition would result in a duplication of benefits. Such service also
shall apply for purposes of satisfying any waiting periods, evidence of
insurability requirements, or the application of any preexisting condition
limitations. Each Parent Plan shall waive pre-existing condition limitations to
the same extent waived under the applicable Plan. Company Employees shall be
given credit for amounts paid under a corresponding benefit plan during the same
period for purposes of applying deductibles, copayments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms and
conditions of the Parent Plan.
(c) As of the Effective Time, Parent shall assume and honor and shall cause
the appropriate Subsidiaries of Parent to assume and to honor in accordance with
their terms all employment, severance and other compensation agreements, plans
and arrangements existing prior to the execution of this Agreement which are
between the Company or any of its Subsidiaries and any director, officer or
employee thereof and which have been disclosed in the Company Disclosure
Schedule. Parent acknowledges and agrees that (i) the Merger constitutes a
"Change of Control" for all purposes pursuant to such agreements and
arrangements and (ii) in light of Parent's plans relating to management
assignments and responsibilities with respect to the business of Parent from and
after the Effective Time, each director, officer or employee who is a party to,
or is otherwise subject to, any such agreement or arrangement will, upon
consummation of the Merger, be entitled to terminate employment thereunder and
receive the severance or other similar benefits that are provided thereunder in
the event of a termination of employment for "Good Reason", constructive
discharge, (including, but not limited to, demotion or reduction in
compensation) or other similar events. Any director, officer or employee of the
Company who is a party to an agreement set forth in Section 7.7(c)
52
of the Company Disclosure Schedule who intends to terminate employment as of the
Effective Time, or who otherwise becomes entitled to benefits thereunder, shall
be entitled to receive the cash benefits payable under such agreement on the
Closing Date by wire transfer of immediately available funds to an account
designated by such employee in writing and delivered to Parent not less than
five (5) business days prior to the Closing Date; provided, however, that (i)
the amounts payable by such wire transfer shall not exceed, individually or in
the aggregate, the amounts reflected in Section 7.7(c) of the Company Disclosure
Schedule and (ii) the employee executes and delivers to the Company an
instrument in form and substance satisfactory to the Parent releasing the Parent
and its affiliates from any further liability for monetary payments under such
agreement. The provisions of this Section 7.7(c) are intended to be for the
benefit of, and shall be enforceable by, each such director, officer or
employee.
(d) Prior to the Effective Time, the Parent shall cause the Parent Bank to
amend its Severance Pay Plan in the form included in Section 5.11(a) of the
Parent Disclosure Schedule to designate the Company and the Company Bank as
"Acquired Companies."
(e) With respect to the Financial Federal Savings and Loan Association
Employee Stock Ownership Plan (the "ESOP"), the Company shall:
(i) take any actions necessary to cause the ESOP to be terminated and
for the balances in all Accounts (as defined in the ESOP) to be come fully
vested and nonforfeitable as of the Closing Date;
(ii) use its best efforts to cause the Trustee of the ESOP to make
such elections under Sections 1.4 and 1.5 of this Agreement with respect to
unallocated Company Common Stock as are necessary to obtain cash at least
equal to the remaining ESOP indebtedness;
(iii) cause the Trustee to use such cash to repay in full all such
outstanding ESOP indebtedness;
(iv) cause the shares of Company Common Stock and/or any cash
remaining in the suspense account maintained under the ESOP, after giving
effect to the repayment of ESOP indebtedness referred to in subparagraph
(iii) above, to be allocated (as of the Closing Date) to the accounts of
all ESOP participants who have account balances as of the Closing Date, as
investment experience in accordance with Section 8.3 of the ESOP;
53
(v) cause the account balances of all ESOP participants to be
distributed in a lump sum (or transferred in accordance with Section
401(a)(31) of the Code) as soon as practicable following the later of (A)
the Closing Date or (B) the date of receipt of a favorable determination
letter from the Internal Revenue Service (the "Service") regarding the
qualified status of the ESOP upon its termination; and
(vi) adopt an amendment to the ESOP, in form and substance reasonably
satisfactory to Parent, which includes and provides for the actions
described in subparagraphs (i), (ii), (iii), (iv) and (v) above.
(f) As soon as practicable after the date hereof, the Company shall file a
request for a determination letter from the Service regarding the continued
qualified status of the ESOP upon its termination. Prior to the Effective Time,
the Company and, following the Effective Time, Parent shall use their respective
best efforts to obtain such favorable determination letter (including, but not
limited to, making such changes to the ESOP and the proposed allocations
described herein as may be requested by the Service as a condition to its
issuance of a favorable determination letter). Neither the Company nor Parent
shall implement any of the actions described in Section 7.7(e) (iv) and (v)
above until receipt of such favorable determination letter.
7.8 Indemnification. (a) It is understood and agreed that after the
Effective Time, Parent shall indemnify and hold harmless, to the fullest extent
that the Company is permitted to indemnify (including advancement of expenses)
its directors and officers under Delaware law or OTS regulations, as applicable
and the Certificate of Incorpora tion and Bylaws of the Company as in effect at
the Effective Time, any person who is now, or has been at any time prior to the
date of this Agreement, or who becomes prior to the Effective Time, a director,
officer or employee of the Company or any of its Subsidiaries (the "Indemnified
Parties") against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorney's fees and expenses in advance of the final
disposition of any claim, suit, proceeding or investigation to each Indemnified
Party) judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Time),
the Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with Parent; provided, however, that (1) Parent shall have the
right to assume the defense thereof and upon such assumption Parent shall not be
liable to any Indemnified Party for any legal expenses of other counsel or any
other expenses subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if Parent elects not
54
to assume such defense or counsel for the Indemnified Parties reasonably advises
that there are issues which raise conflicts of interest between Parent and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Parent, and Parent shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties, (2)
Parent shall in all cases be obligated pursuant to this paragraph to pay for
only one firm of counsel for all Indemnified Parties, (3) Parent shall not be
liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld) and (4) Parent shall have no
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 indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim Indemnification under this Section 7.8, upon
learning of any such claim, action, suit, proceeding or investigation, shall
promptly notify Parent thereof, provided that the failure to so notify shall not
affect the obligations of Parent under this Section 7.8 except to the extent
such failure to notify materially prejudices Parent. Parent's obligations under
this Section 7.8 shall continue in full force and effect for a period of six
years from and after the Effective Time; provided, however, that all rights to
indemnification in respect of any claim asserted or made within such period
shall continue until the final disposition of such claim.
(b) Parent shall cause the persons serving as officers and directors of the
Company immediately prior to the Effective Time to be covered for a period of
three years from the Effective Time by the directors' and officers' liability
insurance policy maintained by the Company (provided that Parent may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy or single premium
tail coverage with policy limits equal to the Company's existing annual coverage
limits) with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as such;
provided, however, that in no event shall Parent be required to expend an
aggregate premium in excess of 200% of the current annual premiums expended by
the Company (the "Insurance Amount") to maintain or procure insurance coverage,
and further provided that if Parent is unable to maintain or obtain the
insurance called for by this Section 7.8(b), Parent shall use all reasonable
efforts to obtain as much comparable insurance as is available for the Insurance
Amount.
(c) In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in
55
each such case, to the extent necessary, proper provision shall be made so that
the successors and assigns of Parent assume the obligations set forth in this
section.
(d) The provisions of this Section 7.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
7.9 Additional Agreements. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of any of the
parties to the Merger, the proper officers and directors of each party to this
Agreement and their respective Subsidiaries shall take all such necessary action
as may be reasonably requested by Parent.
7.10 Coordination of Dividends. Subject to the proviso of Section 6.1(a),
after the date of this Agreement the Company shall coordinate the declaration of
any dividends in respect of the Company Common Stock and the record dates and
payments dates relating thereto with that of the Parent Common Stock, it being
the intention of the parties that the holders of Parent Common Stock or Company
Common Stock shall not receive more than one dividend, or fail to receive one
dividend, for any single calendar quarter with respect to their shares of Parent
Common Stock and/or Company Common Stock and any shares of Parent Common Stock
any holder of Company Common Stock receives in exchange therefor in the Merger.
7.11 Parent Rights Agreement. Parent agrees that Parent Rights shall be
issued with respect to each share of Parent Common Stock issued pursuant to the
terms hereof regardless of whether there has occurred a "Distribution Date"
under the terms of the Parent Rights Agreement prior to the Effective Time, and
Parent shall take all action necessary or advisable to enable the holder of each
share of Parent Common Stock issued pursuant to this Agreement to obtain the
benefit of such Parent Rights notwithstanding their prior distribution,
including, without limitation, amendment of the Parent Rights Agreement.
7.12 Notification of Certain Matters. Each party shall give prompt notice
to the others of (a) any event or notice of, or other communication relating to,
a default or event that, with notice or lapse of time or both, would become a
default, received by it or any of its Subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract material to
the financial condition, properties, businesses or results or operations of the
Company and its Subsidiaries taken as a whole to which the Company or any
Subsidiary is a party or is subject ; and (b) any event,
56
condition, change or occurrence which individually or in the aggregate has, or
which, so far as reasonably can be foreseen at the time of its occurrence, is
reasonably likely to result in a Material Adverse Event. Each of the Company and
the Parent 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.
7.13 Certain Matters, Certain Revaluations, Changes and Adjustments. At or
before the Effective Time, upon the request of Parent, the Company shall,
consistent with GAAP, modify and change its loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) so as to be applied consistently on a mutually satisfactory basis with
those of Parent and establish such accruals and reserves as shall be necessary
to reflect Merger-related expenses and costs incurred by the Company, provided,
however, that the Company shall not be required to take such action (A) more
than five days prior to the Effective Time; and (B) unless Parent agrees in
writing that all conditions to closing set forth in Article VIII have been
satisfied or waived (other than those conditions relating to delivery of
documents on the Closing Date); and provided further, however, that no accrual
or reserve made by the Company or any Company Subsidiary pursuant to this
Section 7.13 or any litigation or regulatory proceeding arising out of any such
accrual or reserve, shall constitute or be deemed to be a breach, violation of
or failure to satisfy any representation, warranty, covenant, condition or other
provision of this Agreement or otherwise be considered in determining whether
any such breach, violation or failure to satisfy shall have occurred.
7.14 Advisory Board. Parent shall, effective as of the Effective Time,
cause Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxx and Xxxxxxxx X.
Xxxxxxx, if such persons are willing to so serve, to be elected or appointed as
members of an advisory board ("Advisory Board") established by Parent, the
function of which shall be to advise Parent 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 initially shall be elected or appointed for a term of one year. Parent
agrees annually to re-elect or re-appoint each of the initial members of the
Advisory Board to two successive one-year terms following the initial one-year
term; provided, however, that Parent shall have no obligation to re-elect or
reappoint any member if Parent reasonably determines that such member has a
conflict of interest that compromises such member's ability to serve effectively
as a member of the advisory board of any cause exists that otherwise would allow
for removal of such person as a director of Parent if such person were a member
of Parent's Board of Directors. Each member of the Advisory Board shall receive
a retainer fee for such service at an annual rate of $25,000, which shall be
payable in quarterly installments or
57
in one lump sum at any time in advance at the option of Parent.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the requisite vote of the holders of the outstanding shares of
Company Common Stock under applicable law.
(b) Listing of Shares. The shares of Parent Common Stock which shall be
issued to the stockholders of the Company upon consummation of the Merger shall
have been authorized for listing for quotation on the NASDAQ/NMS, subject to
official notice of issuance.
(c) Other Approvals. All necessary regulatory or governmental approvals,
consents or waivers required to consummate the transactions contemplated hereby
shall have been obtained and shall remain in full force and effect and all
statutory waiting periods in respect thereof shall have expired; and all other
consents, waivers and approvals of any third parties which are necessary to
permit the consummation of the Merger and the other transactions contemplated
hereby shall have been obtained or made except for those the failure to obtain
would not have a Material Adverse Effect (i) on the Company and its subsidiaries
taken as a whole or (ii) on the Parent and its Subsidiaries taken as a whole.
None of the approvals or waivers referred to herein shall contain any term or
condition which would have a Material Adverse Effect on the Surviving
Corporation and its Subsidiaries, taken as a whole, after giving effect to the
Merger.
(d) S-4. The S-4 shall have become effective under the Securities Act and
no stop order suspending the effectiveness of the S-4 shall have been issued and
no proceedings for that purpose shall have been initiated or threatened by the
SEC.
(e) No Injunctions or Restraints; Illegality. No order, injunction or
decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger shall be in
58
effect. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger.
(f) Affiliate Letters. Parent shall have received the letter agreements
referred to in Section 7.5.
8.2 Conditions to Obligations of Parent. The obligation of Parent to effect
the Merger is also subject to the satisfaction or waiver by Parent at or prior
to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of the Company set forth in this Agreement (other
than those set forth in the first and third sentences of Section 4.1(a), the
second sentence of Section 4.1(b) and Sections 4.2, 4.6, 4.8(a), 4.10 and 4.18)
shall be true and correct as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date; and (ii) the
representations and warranties of the Company set forth in the first and third
sentences of Section 4.1(a), the second sentence of Section 4.1(b) and Sections
4.2, 4.6, 4.8(a), 4.10 and 4.18 of this Agreement shall be true and correct in
all material respects (without giving effect to Section 3.2 of this Agreement)
as of the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date. Parent shall have received a certificate
signed on behalf of the Company by the Chief Executive Officer and the Chief
Financial Officer of the Company to the foregoing effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(c) Federal Tax Opinion. Parent shall have received an opinion from Xxxxxxx
Xxxxxxxx & Wood, counsel to Parent ("Parent's Counsel"), in form and substance
reasonably satisfactory to Parent, dated the Effective Time, substantially to
the effect that, on the basis of facts, representations and assumptions set
forth in such opinion which are consistent with the state of facts existing at
the Effective Time, the Merger will be treated as a reorganization within the
meaning of Section 368(a) of the Code and that, accordingly, for federal income
tax purposes:
59
(i) No gain or loss will be recognized by Parent or the Company as a
result of the Merger;
(ii) No gain or loss will be recognized by the stockholders of the
Company who exchange all of their Company Common Stock solely for Parent
Common Stock pursuant to the Merger (except with respect to cash received
in lieu of a fractional share interest in Parent Common Stock); and
(iii) The aggregate tax basis of the Parent Common Stock received by
stockholders who exchange all of their Company Common Stock solely for
Parent Common Stock pursuant to the Merger will be the same as the
aggregate tax basis of the Company Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional share interest
for which cash is received).
In rendering such opinion, Parent's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form and
substance to such counsel.
(d) Accountant's Letter. The Company shall have caused to be delivered to
the Parent "cold comfort" letters or letters of procedures from the Company's
independent certified public accountants, dated (i) the date of the mailing of
the Proxy Statement to the Company's stockholders and (ii) a date not earlier
than five business days preceding the date of the Closing and addressed to the
Parent, concerning such matters as are customarily covered in transactions of
the type contemplated hereby;
8.3 Conditions to Obligations of the Company. The obligation of the Company
to effect the Merger is also subject to the satisfaction or waiver by the
Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to Section 3.2, the
representations and warranties of Parent set forth in this Agreement (other than
those set forth in the first and third sentences of Section 5.1(a), the second
sentence of Section 5.1(b) and Sections 5.2, 5.6, 5.8(a), 5.10 and 5.18) shall
be true and correct as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date; and (ii) the
representations and warranties of Parent set forth in the first and third
sentences of Section 5.1(a), the second sentence of Section 5.1(b) and Sections
5.2, 5.6, 5.8(a), 5.10 and 5.18 of this Agreement shall be true and correct in
all material
60
respects (without giving effect to Section 3.2 of this Agreement) as of the date
of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date. The Company shall have received a certificate signed on behalf
of Parent by the Chief Executive Officer and the Chief Financial Officer of
Parent to the foregoing effect.
(b) Performance of Obligations of Parent. Parent shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and the Company shall have received a
certificate signed on behalf of Parent by the Chief Executive Officer and the
Chief Financial Officer of Parent to such effect.
(c) Federal Tax Opinion. The Company shall have received an opinion from
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP (the "Company's Counsel"), in form and
substance reasonably satisfactory to the Company, dated the Effective Time,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code and that,
accordingly, for federal income tax purposes:
(i) No gain or loss will be recognized by Parent or the Company as a
result of the Merger;
(ii) No gain or loss will be recognized by the stockhold ers of the
Company who exchange all of their Company Common Stock solely for Parent
Common Stock pursuant to the Merger (except with respect to cash received
in lieu of a fractional share interest in Parent Common Stock); and
(iii) The aggregate tax basis of the Parent Common Stock received by
stockholders who exchange all of their Company Common Stock solely for
Parent Common Stock pursuant to the Merger will be the same as the
aggregate tax basis of the Company Common Stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional share interest
for which cash is received).
In rendering such opinion, the Company's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Parent, the Company and others, reasonably satisfactory in form and
substance to such counsel.
61
(d) Accountant's Letter. Parent shall have executed to be delivered to the
Company "cold comfort" letters or letters of procedures from the Parent's
independent certified public accountants, dated (i) the date of the mailing of
the Proxy Statement to the Company's stockholders and (ii) a date not earlier
than five business days preceding the date of the Closing and addressed to the
Company, concerning such matters as are customarily covered in transactions of
the type contemplated hereby.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company:
(a) by mutual consent of the Company and Parent in a written instrument, if
the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) by either Parent or the Company upon written notice to the other party
(i) 60 days after the date on which any request or application for a Requisite
Regulatory Approval shall have been denied or withdrawn at the request or
recommen dation of the Governmental Entity which must grant such Requisite
Regulatory Approval, unless within the 60-day period following such denial or
withdrawal a petition for rehearing or an amended application has been filed
with the applicable Governmental Entity, provided, however, that no party shall
have the right to terminate this Agreement pursuant to this Section 9.1(b)(i) if
such denial or request or recommen dation for withdrawal shall be due to the
failure of the party seeking to terminate this Agreement to perform or observe
the covenants and agreements of such party set forth herein or (ii) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order enjoining or otherwise prohibiting the Merger;
(c) by either Parent or the Company, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, if the
Merger shall not have been consummated on or before March 31, 1999, unless the
failure of the Closing to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;
62
(d) by either Parent or the Company if its Board of Directors so determines
by a vote of a majority of the members of its entire Board (provided that if the
Company is the terminating party, it shall not be in material breach of any of
its obligations under Section 7.3) if any approval of the stockholders of the
Company required for the consummation of the Merger shall not have been obtained
by reason of the failure to obtain the required vote at a duly held meeting of
such stockholders or at any adjournment or postponement thereof;
(e) by either Parent or the Company, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, (provided
that the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have been
a material breach of any of the representations or warranties set forth in this
Agreement on the part of the other party, which breach is not cured within
thirty days following written notice to the party committing such breach, or
which breach, by its nature, cannot be cured prior to the Closing; provided,
however, that neither party shall have the right to terminate this Agreement
pursuant to this Section 9.1(e) unless the breach of representation or warranty,
together with all other such breaches, would entitle the party receiving such
representation not to consummate the transactions contemplated hereby under
Section 8.2(a) (in the case of a breach of representation or warranty by the
Company) or Section 8.3(a) (in the case of a breach of representation or
warranty by Parent);
(f) by either Parent or the Company , if its Board of Directors so
determines by a vote of a majority of the members of its entire Board (provided
that the terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein), if there shall have
been a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within thirty days following receipt by the breaching party of written notice of
such breach from the other party hereto, or which breach, by its nature, cannot
be cured prior to the Closing; or
(g) by the Company, if its Board of Directors so determines by a vote of a
majority of the members of its entire Board, if the Average Closing Price is
less than or equal to $20.25, subject, however, to the following three
sentences. If the Company makes an election to terminate this Agreement under
this Section 9.1(g), it shall give ten (10) days prior written notice thereof to
Parent (provided that such notice of election may be withdrawn at any time
within the aforementioned ten-day period). During the seven-day period
commencing with its receipt of such notice, Parent shall have the option to
increase the value of the cash, the Parent Common Stock or a combination thereof
being offered to stockholders of the Company (through an increase
63
in the Aggregate Cash Consideration and/or Preliminary Stock Ratio) such that
the Per Share Consideration is at least $38.12 per share (provided that Parent
shall be limited in its ability to elect to increase the Aggregate Cash
Consideration to the extent necessary to allow the Merger to qualify as a
reorganization within the meaning of Section 368 of the Code). If Parent so
elects within such seven-day period, it shall give prompt written notice to the
Company of such election and the increase in the Merger Consideration whereupon
no termination shall have occurred and this Agreement shall remain in effect in
accordance with its terms (except as the Aggregate Cash Consider ation and/or
the Preliminary Stock Ratio, and all amounts set forth in Article I derived
therefrom, shall have been so modified).
9.2 Effect of Termination. In the event of termination of this Agreement by
either Parent or the Company as provided in Section 9.1, this Agreement shall
forthwith become void and have no effect except (i) Sections 7.2(b), 9.2 and
10.3 shall survive any termination of this Agreement and (ii) that
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
9.3 Amendment. Subject to compliance with applicable law, this Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the stockholders of the
Company; provided, however, that after any approval of the transactions
contemplated by this Agreement by the Company's stockholders, there may not be,
without further approval of such stockhold ers, any amendment of this Agreement
which reduces the amount or changes the form of the consideration to be
delivered to the Company stockholders hereunder other than as contemplated by
this Agreement. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time, each of the
parties hereto, by action taken or authorized by its Board of Directors, may, to
the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions of the other party contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party, but such extension or waiver or failure to insist on strict
compliance with an obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
64
9.5 Termination Fee. In the event that at any time after the date of this
Agreement (i) any person (as defined in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act, and the rules and regulations thereunder), other than Parent or
any Subsidiary of Parent, shall have acquired beneficial ownership of 10% or
more of the outstanding shares of Common Stock (the term "beneficial ownership"
for purposes of this Agreement having the meaning assigned thereto in Section
13(d) of the Exchange Act, and the rules and regulations thereunder) provided
that such acquisition shall have required prior regulatory approval (including
waiver of such approval), (ii) (A) the holders of Company Common Stock shall not
have approved this Agreement and the transactions contemplated hereby at the
meeting of such stockholders held for the purpose of voting on this Agreement,
(B) such meeting shall not have been held or shall have been canceled, (C) the
Board of Directors of the Company shall have publicly withdrawn or modified, or
publicly announced its intent to withdraw or modify, in any manner adverse to
Parent, its recommendation that the stockholders of the Company approve the
transactions contemplated by this Agreement, or (D) the Company shall have
breached any covenant or obligation contained in this Agreement and such breach
would entitle Parent to terminate this Agreement, in each case after it shall
have been publicly announced that any person other than Parent or any Subsidiary
of Parent shall have made a bona fide proposal by public announcement or written
communication that becomes the subject of public disclosure to engage in a
merger, consolidation or similar transaction with, or a purchase or other
acquisition of all or substantially all of the assets or 10% or more of the
outstanding shares of Common Stock of, the Company, or (iii) a Purchase Event
(as defined in the Stock Option Agreement) shall have occurred prior to the
occurrence of an Exchange Termination Event (as defined in the Stock Option
Agreement), then in any such case the Company shall pay to Parent a termination
fee of $1.0 million.
ARTICLE X
GENERAL PROVISIONS
10.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the Merger (the "Closing") will take place at 10:00 a.m. on the first
day which is at least two and not more than five business days after the
satisfaction or waiver (subject to applicable law) of the latest to occur of the
conditions set forth in Article VIII hereof (other than those conditions which
relate to actions to be taken at the Closing) (the "Closing Date"), at the
offices of Xxxxxxx Xxxxxxxx & Xxxx, unless another time, date or place is agreed
to in writing by the parties hereto; provided, however, that the Closing shall
occur no earlier than January 5, 1999, and shall not occur until after the
65
Election Deadline.
10.2 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for those covenants and agreements contained herein and therein
which by their terms apply in whole or in part after the Effective Time.
10.3 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
10.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirma tion), mailed by registered or certified mail (return receipt
requested) or delivered by an express courier (with confirmation) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent, to:
The Dime Savings Bank of Williamsburgh
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
with a copy to:
Xxxxxxx Xxxxxxxx & Wood
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000, 39th Fl.
Attention: Xxxxxx X. Xxxxxx, Esq.
and
(b) if to the Company, to:
Financial Federal Savings Bank
00-00 Xxxxxx Xxxxxxxxx
Xxxx Xxxxxx Xxxx, XX 00000
Attention: Chief Executive Officer
66
with a copy to:
Skadden, Arps, Slate, Xxxxxxx
& Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, Esq.
10.5 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrases "the date of this Agreement", "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to July 18, 1998. No provision of this Agreement shall be construed to
require the Company, Parent or any of their respective Subsidiaries or
affiliates to take any action that would violate any applicable law, rule or
regulation.
10.6 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
10.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein), together with the Option Agreement and the
Confidenti ality Agreement, constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
10.8 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to any
applicable conflicts of law.
10.9 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable
67
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
10.10 Publicity. Except as otherwise required by law or the rules of the
NASDAQ/NMS, so long as this Agreement is in effect, neither Parent nor the
Company shall, or shall permit any of its Subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to,
or otherwise make any public statement concerning, the transactions contemplated
by this Agreement without the consent of the other party, which consent shall
not be unreasonably withheld.
10.11 Assignment; No Third Party Beneficiaries. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns. Except as otherwise
expressly provided herein, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
68
IN WITNESS WHEREOF, Parent and the Company have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
Dime Community Bancshares, Inc.
By /s/ XXXXXXX X. PABGIANO
-----------------------------------
Name: Xxxxxxx X. Pabgiano
Title: Chairman/CEO
Financial Bancorp, Inc.
By /s/ XXXXX X. XXXXXXXX
-----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President/CEO
Exhibit A
================================================================================
PLAN OF BANK MERGER
DATED AS OF THE __th DAY OF JULY, 1998
BY AND BETWEEN
FINANCIAL FEDERAL SAVINGS BANK
AND
THE DIME SAVINGS BANK OF WILLIAMSBURGH
================================================================================
THIS PLAN OF BANK MERGER ("Plan of Merger") dated as of July__, 1998, is by
and between The Dime Savings Bank of Williamsburgh (the "Bank"), a federally
chartered stock savings bank and a wholly owned subsidiary of Dime Community
Bancshares, Inc., a Delaware corporation (the "Company"), and Financial Federal
Savings Bank ("Financial Bank"), a federally chartered stock savings bank and a
wholly owned subsidiary of Financial Bancorp, Inc., a Delaware corporation
("Financial"), pursuant to an Agreement and Plan of Merger dated as of the 18th
day of July, 1998 (the "Merger Agreement"), by and between the Company and
Financial. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Merger Agreement.
BACKGROUND
1. The authorized capital stock of the Bank consists of 20,000,000 shares
of common stock, par value $1.00 per share (the "Bank Common Stock"), of which
1,000 shares are issued and outstanding, and 5,000,000 shares of preferred
stock, par value $1.00 per share, of which none are issued and outstanding.
2. The authorized capital stock of Financial Bank consists of 7,000,000
shares of common stock, par value $1.00 per share (the "Financial Bank Common
Stock"), of which 1,706,666 shares are issued and outstanding, and 3,000,000
shares of preferred stock, par value $1.00 per share, of which none are issued
and outstanding.
3. The respective Boards of Directors of the Bank and Financial Bank deem
the merger of Financial Bank with and into the Bank, pursuant to the terms and
conditions set forth or referred to herein, to be desirable and in the best
interests of the respective institutions and their respective shareholders.
4. The respective Boards of Directors of the Bank and Financial Bank have
adopted resolutions approving this Plan of Merger. The respective Boards of
Directors of the Company, the Bank, Financial and Financial Bank have adopted
resolutions approving the Merger Agreement, pursuant to which this Plan of
Merger is being executed by the Bank and Financial Bank.
AGREEMENT
In consideration of the promises and of the mutual covenants and agreements
herein contained, and in accordance with the applicable laws and regulations of
the United States of America, including 12 U.S.C. ss. 1828(c), 12 C.F.R. ss.
552.13 and 12 C.F.R. ss. 563.22 and the State of New York, the Bank and
Financial Bank, intending to be legally bound hereby, agree:
ARTICLE I
MERGER
Subject to the terms and conditions of this Plan of Merger and in
accordance with the applicable laws and regulations of the United States of
America and the State of New York, on the Effective Date (as that term is
defined in Article V hereof) immediately following the consummation of the
Merger of Financial into the Company, Financial Bank shall merge with and into
the Bank; the separate existence of Financial Bank shall cease; and the Bank
shall be the surviving corporation (such transaction is referred to herein as
the "Merger" and the Bank as the surviving corporation in the Merger, is
referred to herein as the "Surviving Bank"). The Bank, whose name will remain
unaffected by the Merger, will have its home office at 000 Xxxxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxx 00000 and its branch offices at the locations listed on
Exhibit "A."
ARTICLE II
CHARTER AND BYLAWS
On and after the Effective Date, the Federal Stock Charter and Bylaws of
the Bank, as in effect immediately prior to the Effective Date, shall
automatically be and remain the Federal Stock Charter and Bylaws of the
Surviving Bank, until altered, amended, or repealed.
ARTICLE III
BOARD OF DIRECTORS
3.1 Board of Directors. On and after the Effective Date, the directors of
the Surviving Bank shall consist of the directors of the Bank duly elected and
holding office immediately prior to the Effective Date. The names and residence
addresses of the directors are:
Name Residence Address
---- -----------------
Xxxxxxx X. Xxxxxxxxx 00 XxXxxxx Xxxxx, Xxxxxx Xxxxxx, XX 00000
Xxxxxxx X. Xxxxxx 00 Xxxxxxxxxx Xxxx, Xxxxxx, XX 00000
Xxxxxxx X. Xxxxx 00 Xxxxxx Xxx, Xxxxxx, XX 00000
Xxxxxxx Xxxxxxx 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000
Xxxxxx X. Xxxxx, Xx. 000 Xxxxxx X, Xxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx 0 Xxxxx Xxxx Xxxx, Xxx Xxxxx, XX 00000
Xxxxxx X. Xxxx 00 Xxxxx Xxxxxx, Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx 000 Xxxxx 000xx Xx., Xxxxx Xxxxxx, XX 00000
Xxxx X. Xxxxxxxxxx 0 Xxxxxx Xxxx, Xxxxx Xxxxx, XX 00000
Xxxx X. Xxxxx 0 Xxxxx Xxxxxx, Xxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxx 0 Xxxxxxxxx Xxxxx, Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxx 0000 Xxxx Xxxxxx, Xxxxxxx, XX 00000
Xxxxx X. Xxxxxx 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000
ARTICLE IV
CONVERSION OF SHARES
4.1 Common Stock of the Bank. Each share of the Bank Common
Stock issued and outstanding immediately prior to the Effective Date shall, on
and after the Effective Date, continue to be issued and outstanding as a share
of common stock of the Surviving Bank.
4.2 Common Stock of Financial Bank. Each share of the
Financial Bank Common Stock issued and outstanding immediately prior to the
Effective Date, and each share of the Financial Bank Common Stock issued and
held in the treasury of Financial Bank as of the Effective Date, if any, shall,
on the Effective Date, be canceled, and no cash, stock or other property shall
be delivered in exchange therefor.
ARTICLE V
EFFECTIVE DATE OF THE MERGER
The Merger shall be effective on the date on which the articles of
combination with respect to the Merger are filed with the Office of Thrift
Supervision (the "OTS") or such other date and time as specified therein (the
"Effective Date").
ARTICLE VI
EFFECT OF THE MERGER
6.1 Separate Existence. The Merger shall have the effects set forth in 12
C.F.R. ss. 552.13. On the Effective Date the separate existence of Financial
Bank shall cease and all of the property (real, personal and mixed), rights,
powers, duties and obligations of Financial Bank shall be taken and deemed to be
transferred to and vested in the Surviving Bank, without further act or deed, as
provided by applicable laws and regulations.
6.2 Savings Accounts. After the Effective Date, the Bank will continue to
issue savings accounts on the same basis as immediately prior to the Effective
Date.
6.3 Liquidation Account. After the Effective Date, the Bank will continue
to maintain the Bank's liquidation account for the benefit of eligible account
holders on the same basis as immediately prior to the Effective Date, and
Financial Bank's liquidation account for the benefit of eligible account holders
shall automatically be expressly assumed by the Bank, as of the Effective Date,
on the same basis as it existed immediately prior to the Effective Date.
ARTICLE VII
CONDITIONS PRECEDENT
The obligations of the Bank and Financial Bank to effect the Merger shall
be subject to satisfaction, unless duly waived by the party permitted to do so,
of the conditions precedent set forth in the Merger Agreement, including,
without limitation, the approval of the OTS as required by 12 C.F.R. ss. 552.13
and 563.22.
ARTICLE VIII
TERMINATION
This Plan of Merger shall terminate upon any termination of the Merger
Agreement in accordance with its terms; provided, however, that any such
termination of this Plan of Merger shall not relieve any party hereto from
liability on account of a breach by such party of any of the terms hereof or
thereof.
ARTICLE IX
AMENDMENT
Subject to applicable law, this Plan of Merger may be amended
at any time prior to consummation of the Merger, but only by an instrument in
writing signed by duly authorized officers on behalf of the parties hereto.
ARTICLE X
MISCELLANEOUS
10.1 Extensions; Waivers. Each party, by a written instrument signed by a
duly authorized officer, may extend the time for the performance of any of the
obligations or other acts of the other party hereto and may waive compliance
with any of the covenants, or performance of any of the obligations, of the
other party contained in this Plan of Merger.
10.2 Notices. Any notice or other communication required or permitted under
this Plan of Merger shall be given, and shall be effective, in accordance with
the provisions of Section 10.4 of the Merger Agreement.
10.3 Captions. The headings of the several Articles and Sections herein are
inserted for convenience of reference only and are not intended to be part of,
or to affect the meaning or interpretation of, this Plan of Merger.
10.4 Counterparts. For the convenience of the parties hereto, this Plan of
Merger may be executed in several counterparts, each of which shall be deemed
the original, but all of which together shall constitute one and the same
instrument.
10.5 Governing Law. This Plan of Merger shall be governed by and construed
in accordance with the laws of the United States of America and, in the absence
of controlling Federal law, in accordance with the laws of the State of New
York.
IN WITNESS WHEREOF, the Bank and Financial Bank have caused this Plan of
Merger to be executed by their duly authorized officers and their corporate
seals to be hereunto affixed on the date first written above.
By________________________________
Xxxxxxx X. Xxxxxxxxx
Chairman of the Board and Chief Executive
Officer
By________________________________
Xxxxx X. Lataweic
President and Chief Executive Officer
EXHIBIT A
The Dime Savings Bank of Williamsburgh
Branch Locations
1. 000 Xxxxx 0xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
(administrative office)
2. 000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
3. 0000 Xxxxxx X xx xxxx 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
4. 00-00 Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
5. 0000 Xxxxxxxxx Xxx
Xxxxxxxx, Xxx Xxxx 00000
6. 0000 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
7. 0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxx Xxxx 00000
8. 0000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
9. 000-00 Xxxxx Xxxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
10. 0000-0000 Xxxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
11. 0000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
12. 0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
13. 0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
14. 0000 Xxxxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx 00000
15. 000 Xxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
16. 00-00 Xxxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
17. 00-00 Xxxxxx Xxxxxxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
18. 00-00 00xx Xxxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
19. 00-00 00xx Xxxxxx
Xxxxxxx Xxxxxxx, Xxx Xxxx 00000
20. 0000 Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
21. 000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Exhibit B
July 18, 1998
Dime Community Bancshares, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
I am delivering this letter to you in connection with the proposed merger
(the "Merger") of Financial Bancorp, Inc. ("Financial") with and into Dime
Community Bancshares, Inc., ("DCB"), pursuant to the Agreement and Plan of
Merger dated July 18, 1998 (the "Merger Agreement") between Financial and DCB.
Capitalized terms used herein and not otherwise defined have the meanings
assigned to them in the Merger Agreement. I currently own ________________
shares of common stock, par value $0.01 per share, of Financial ("Financial
Common Stock"). As a result of the Merger, I will receive shares of common stock
of DCB, par value $0.01 per share ("DCB Common Stock), in exchange for my
Financial Common Stock.
I have been advised that as of the date of this letter I may be deemed to
be an "affiliate" of Financial, as the term "affiliate" is defined for purposes
of paragraphs (c) and (d) of Rule 145 of the rules and regulations promulgated
under the Securities Act of 1993, as amended (the "1933 Act") by the Securities
and Exchange Commission (the "Commission").
I represent to and agree with DCB:
A. Compliance with Rule 145. I have been advised that the issuance of DCB
Common Stock to me pursuant to the Merger will be registered with the Commission
under the 1933 Act on a Registration Statement on Form S-4. However, I have also
been advised that, since I may be deemed to be an affiliate of Financial at the
time the Merger is submitted for a vote of Financial's shareholders, any
transfer by me of DCB Common Stock is restricted under Rule 145 promulgated by
the Commission under the 1933 Act. I agree not to transfer any DCB Common Stock
received by me unless (i) such transfer is made in conformity with the volume
and other limitations of Rule 145 promulgated by the Commission under the 1933
Act, (ii) in the opinion of DCB counsel or counsel reasonably acceptable to DCB,
such transfer is otherwise exempt from registration under the 1933 Act or (iii)
such transfer is registered under the 1933 Act.
B. Stop Transfer Instructions; Legend on Certificates. I also understand
and agree that stop transfer instructions will be given to DCB transfer agents
with respect to the DCB Common Stock received by me and that there will be
placed on the certificates of the DCB Common Stock issued to me, or any
substitutions therefor, a legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, APPLIES. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED JULY 18,
1998 BETWEEN THE REGISTERED HOLDER HEREOF AND DIME COMMUNITY
BANCSHARES, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICES OF DIME COMMUNITY BANCSHARES, INC.
C. Related Parties. I recognize and agree that the foregoing provisions
also apply to (i) my spouse, (ii) any relative of mine or my spouse occupying my
home, (iii) any trust or estate in which I, my spouse, or any such relative owns
at least 10% beneficial interest or of which any of us serves as trustee,
executor or in any similar capacity and (iv) any corporation or other
organization in which I, my spouse or any such relative owns at least 10% of any
class of equity securities or of the equity interest.
D. Consultation with Counsel. I have carefully read this letter and the
Merger Agreement and discussed the requirements of such documents and other
applicable limitations upon my ability to transfer Financial Common Stock or DCB
Common Stock to the extent I felt necessary with my counsel or counsel for
Financial.
E. Voting of Shares. I will be present (in person or by proxy) at all
meetings of shareholders of Financial called to vote for approval of the Merger
so that all shares of Financial Common Stock I then own will be counted for the
purpose of determining the presence of a quorum at such meetings and I will vote
all such shares in favor of approval and adoption of the Merger Agreement and
the transactions contemplated thereby (including any amendments or modifications
of the terms thereof approved by the Board of Directors of Financial).
F. Termination. It is understood and agreed that this letter agreement
shall terminate and be of no further force and effect if the Merger Agreement is
terminated in accordance with its terms. It is also understood and agreed that
upon the later of delivery by the undersigned to DCB of a copy of a letter from
the staff of the Commission, an opinion of counsel in form and substance
reasonably satisfactory to DCB, or other evidence reasonably satisfactory to DCB
to the effect that a transfer of my shares of DCB Common Stock will not violate
the 1933 Act or any of the rules and regulations of the Commission thereunder,
the stop transfer instruction set forth in Paragraph B above shall be lifted and
the legend set forth in Paragraph B above shall be removed forthwith with
respect to the shares being transferred.
Execution of this letter is not an admission on my part that I am an
"affiliate" of Financial as described in the second paragraph of this letter, or
a waiver of any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter.
Very truly yours,
________________________________
Name:
Title:
ACCEPTED THIS ____ DAY OF
JULY, 1998 BY
DIME COMMUNITY BANCSHARES, INC.
By: _______________________________
Name:
Title:
